Hong Kong to issue first batch of stablecoin licenses in Q1, finance chief says

Hong Kong’s ambitious plan to solidify its position as a global virtual asset (VA) hub is moving forward rapidly, with Financial Secretary Paul Chan Mo-po confirming that the city expects to issue its first batch of licenses for stablecoin issuers in the first quarter of the year.

This announcement marks a critical implementation phase following extensive consultations conducted by the Hong Kong Monetary Authority (HKMA) regarding the regulatory framework for fiat-referenced stablecoins.

Chan stressed that establishing a clear and robust regulatory framework is essential for managing the inherent risks of digital assets while promoting responsible innovation. The framework focuses heavily on ensuring that stablecoins, which are pegged to fiat currencies, adhere to stringent standards concerning reserve backing, governance, and effective redemption mechanisms.

While Hong Kong introduced mandatory licensing for Virtual Asset Service Providers (VASPs) in mid-2023, the licensing of stablecoin issuers represents a separate but equally crucial step toward integrating virtual assets into the mainstream financial system securely.

The HKMA has previously indicated that it would adopt a phased approach to regulation, utilizing a ‘sandbox’ environment to allow licensed issuers to test their operations under strict supervisory oversight. This Q1 target signals that the city is nearing the completion of the regulatory groundwork necessary to welcome major global stablecoin players, reinforcing Hong Kong’s commitment to maintaining its status as a world-leading financial center.

Source: Hong Kong to issue first batch of stablecoin licenses in Q1, finance chief says