- •Hong Kong’s Stablecoins Ordinance drew strong initial interest, with dozens of entities signaling applications, but enthusiasm has cooled as regulatory challenges became clearer.
- •China’s CSRC urged brokerages to pause RWA tokenization in Hong Kong, indirectly affecting stablecoin strategies by disrupting business models and confidence across the sector.
- •The HKMA is expected to issue only a few licences in 2026, with larger institutions favored, while smaller firms may delay, withdraw, or seek other jurisdictions.
Hong Kong’s stablecoin licence regime began with strong enthusiasm, but regulatory caution and RWA restrictions have slowed momentum, creating uncertainty for applicants and the market’s future.
INTRODUCTION
At the outset, Hong Kong’s stablecoin policy generated significant enthusiasm.
Since the Stablecoins Ordinance took effect on August 1, 2025, there has been growing interest across the blockchain and financial sectors. The framework promised clarity: the issuance of fiat‑referenced stablecoins would now require a licence from the Hong Kong Monetary Authority (HKMA). Within weeks, reports indicated that 77 entities had expressed interest in applying. The atmosphere was optimistic, with many anticipating Hong Kong’s potential to become a leading hub for regulated stablecoins in Asia.
Yet, this optimism soon met its first obstacle.
In late September, media reports suggested that China’s securities regulator, the CSRC, had informally advised several mainland brokerages to pause their real‑world asset (RWA) tokenization projects in Hong Kong. Although this guidance was not directed at stablecoins specifically, the connection between RWA tokenization and stablecoin issuance is significant. RWA structures often underpin stablecoins by providing collateral or supporting use cases, so restrictions on RWA inevitably affect the broader ecosystem.
As a result of this shift in tone, confidence among potential applicants began to waver.
Several prospective licensees reconsidered their strategies. Some slowed their applications, while others reportedly stepped back altogether. The optimism of early August gave way to caution, as firms weighed the costs and risks of proceeding under heightened uncertainty. Smaller players, in particular, appear more vulnerable, given the higher compliance and capital requirements attached to the licensing regime.
FACTORS BEHIND THE SHIFT
The reasons for this growing hesitation are multifaceted. First, regulatory uncertainty has created anxiety. If Beijing’s informal guidance becomes a long‑term policy stance, firms fear greater oversight or restrictions down the line. Second, the compliance burden is substantial. The HKMA requires robust governance, strict KYC/AML procedures, and 100 percent reserve backing, which represent significant costs. Third, investor sentiment is fragile. When well‑known companies hesitate, confidence across the sector tends to weaken. Finally, some projects are exploring alternative jurisdictions, such as Singapore or the UAE, where regulatory expectations may be clearer or more flexible.
IMPLICATIONS FOR THE MARKET
Taken together, these factors have tangible consequences for the market. The number of licence applications is likely to be smaller than initially expected, and competition may be concentrated among a handful of large, well‑capitalised institutions. These firms may include banks, telecoms, or major technology companies, rather than the lean startups that first viewed Hong Kong as a gateway. This concentration could ensure regulatory robustness but may limit diversity and innovation in the short term.
OUTLOOK AND FUTURE DEVELOPMENTS
Looking forward, much will depend on how the HKMA implements the new framework. The regulator has suggested that the first licences may be issued in early 2026, but only to a small number of applicants. Observers expect the HKMA to proceed cautiously, prioritising stability over rapid expansion. The success of the first licensed stablecoins will be closely monitored, as their performance will help determine whether the framework inspires confidence or prompts further adjustments.
Ultimately, the direction of Hong Kong’s stablecoin policy will be shaped by both local and mainland considerations. Authorities may refine certain rules, potentially offering sandboxes or pilot programs if the market demonstrates low‑risk adoption. At the same time, developments in Beijing will remain critical. If mainland regulators continue to hold a cautious stance toward digital assets and tokenisation, Hong Kong’s room for manoeuvre may be limited. Conversely, if attitudes soften, Hong Kong could see renewed momentum.
In summary, Hong Kong’s stablecoin licence regime began with strong enthusiasm, but recent regulatory signals have introduced a more cautious atmosphere. The industry now faces a period of adjustment, as firms balance the opportunities of being early movers against the risks of uncertain policy direction.