HK Stablecoin: Between Crypto's Decline And Digital Yuan's Rise

2025-08-04 02:01:27

(MENAFN- Asia Times) On August 1, Hong Kong's Stablecoin Ordinance officially came into force, marking the city as the first jurisdiction in Asia to roll out a comprehensive regulatory and licensing regime for stablecoins.

The Hong Kong Monetary Authority (HKMA) announced that it expects to issue the first batch of stablecoin licenses by early 2027 and has already begun vetting applicants and preparing operational frameworks.

This brisk yet deliberate rollout signals Hong Kong's measured gamble in digital finance-a venture that aims to strike a balance between innovation and stability, all in the pursuit of a trust-based new financial order.

Purpose-built regulatory experiment

Unlike the US model-where markets often race ahead of regulators-Hong Kong has embedded risk controls into the system from the outset.

The framework mandates 100% fiat reserves, rigorous audits, a minimum capital requirement of HK$25 million (US$3.2 million), and smart contract security verification. This places it closer in spirit to Singapore's Payment Services Act or the EU's MiCA, albeit with a bolder vision: to serve as a clearinghouse hub for stablecoin-based settlement.

Currently, only applicants who meet stringent conditions are eligible to apply for a stablecoin license. Among the dozens of interested institutions, it is estimated that only three to four may ultimately be approved. It's not hard to see why: to safeguard both stability and safety, this is a game reserved for giants.

Eddie Yue, chief executive of the Hong Kong Monetary Authority, previously emphasized that“Stablecoins are not investment or speculative tools. Rather, they are one form of payment application built on blockchain technology, with no inherent potential for capital gain.”

Stablecoins and crypto: From power couple to conscious uncoupling

Originally, stablecoins were the indispensable partner of the crypto universe.

They smoothed out volatility, allowing exchanges and DeFi protocols to function with some semblance of price stability. But the relationship is changing. As regulators step in and financial sovereignty takes center stage, stablecoins are being reimagined as standalone instruments.

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