jakiro
author:Zhu Weisha and Zhang Feng
1. Introduction: A new regulatory situation where opportunities and challenges coexist
The Hong Kong Monetary Authority recently announced that as of August 31, 2025, a total of 77 institutions have expressed their intention to apply for stablecoin licenses, covering a variety of entities such as banks, technology companies, securities companies and payment institutions.This data not only reflects the market’s high attention to the Hong Kong stablecoin regulatory framework, but also indicates the subsequent regulatory challenges and realistic choices.
Faced with such a large number of applications, the Hong Kong SAR government and financial regulators are in a sweet dilemma.If all approvals are approved, regulatory resources will be under tremendous pressure; if only a few companies are approved and unapproved companies also meet the statutory conditions, it may have an impact on Hong Kong’s reputation for the rule of law.Behind this approval dilemma, the deeper question is: How should Hong Kong seize the historical opportunities of stablecoin development while avoiding possible financial risks?
2. The essence of stablecoin competition: competition among countries and the call of entrepreneurial spirit
The competition for stablecoins is an overview of technology competition among enterprises, but in essence, it is a contest between financial strength and institutional advantages among countries.The fiat currency system can be divided into three categories: basic currency (such as US dollar, euro), anchor currency (such as Hong Kong dollar), and sovereign currency (such as Japanese yen and RMB).The rise of US dollar stablecoins poses a challenge to all sovereign currencies, and many weak sovereign currencies may gradually withdraw from international markets.
Entrepreneurship plays a crucial role in this global competition.Historically, financial innovation has been driven by entrepreneurs.In 1694, Scottish entrepreneur William Patterson founded the Bank of England, which solved the fiscal crisis of the British government and laid the foundation for the modern monetary system.In 1983, the entrepreneurship-oriented Finance Secretary Peng Lizhi led the implementation of the linked exchange rate system, saving Hong Kong’s exchange rate crisis and establishing Hong Kong’s position as an international financial center.
Today, Hong Kong is at a critical juncture in the development of stablecoins and needs to balance risk control and innovative vitality, which is inseparable from entrepreneurial spirit.Professional managers are good at implementing systems, but they are often cautious when facing major decisions.Hong Kong needs to combine professional supervision with entrepreneurial innovation in order to seize the historical opportunity of stablecoin development.
Analysis of the pros and cons of the issuance of three stablecoins
(I) Hong Kong dollar stablecoin: realistic constraints and institutional reconstruction
Hong Kong dollar stablecoins face obvious practical constraints.The Hong Kong dollar adopts a linked exchange rate system, is pegged to the US dollar, and the fluctuation range is controlled within 1%, which must be adjusted by the HKMA.If multiple companies are allowed to issue Hong Kong dollar stablecoins, speculators may use the price spread between the US dollar, Hong Kong dollar and stablecoins to arbitrage, bringing uncontrollable risks.
Therefore, the issuance of Hong Kong dollar stablecoins should be reconstructed based on the existing monetary system.The best solution is to designate three banknote issuing banks (HSBC, Standard Chartered, and Bank of China Hong Kong) to issue Hong Kong dollar stablecoins based on the linked exchange rate system.This move can not only maximize the use of the existing system, but also include the credit and stability of stablecoins in the management scope of the HKMA.
(II) US dollar stablecoin (USHK): a major opportunity in Hong Kong
The US dollar stablecoin (USHK) provides Hong Kong with major development opportunities.The stability of the US dollar itself is under the responsibility of the Federal Reserve, and the HKMA only needs to ensure the anchor relationship between USHK and the US dollar.The issuance mechanism can be similar to the Hong Kong dollar stablecoin, but the issuance entity can be expanded to multiple qualified institutions rather than limited to three banks.
USHK has obvious advantages
Income mechanism innovation: The HKMA can allocate part of its interest on U.S. debt to issuers, which is significantly attractive compared to Tether (no interest payment) and institutions restricted by the U.S. Genius Act.
Credit transparency: The HKMA has 42 years of credibility accumulation, mature and transparent audit and operation processes, far surpassing private institutions such as Tether.
Unified brand effect: The unified use of the USHK brand is conducive to scale effect and international acceptance, and can better represent the characteristics of Hong Kong’s financial center.
Implementation path
Ethereum is preferred as the issuance chain because its consensus mechanism is stable and transparent;
At the same time, establish a transparent centralized database based on Ethereum to strengthen AML/CFT control;
Develop special implementation rules to ensure compliance with bank-grade KYC, AML and CFT standards.
From a geopolitical perspective, as a country ruled by law, the United States is unlikely to interfere with the Hong Kong-related exchange rate system or the issuance of USDT products, so the launch of USHK is internationally legitimized.
(III) RMB Stablecoin (CNHK): Limited options for prudent advancement
Similar mechanisms can also be applied to the issuance of RMB stablecoin CNHK, but should be strictly limited to the offshore RMB market, with a controllable scale (about 3 trillion), and will not affect the financial stability of the mainland.If you try to promote the internationalization of the RMB, it will be subject to the reality that the RMB is not freely convertible, and the above method does not apply.
Some people believe that gold endorsement can be introduced to issue RMB stablecoins, but this idea is outdated and short-sighted, and lacks understanding of cryptocurrencies born in the Internet era.The development of RMB stablecoin should be carried out prudently, with the premise of not undermining the financial stability of the mainland.
4. Comprehensive analysis of approval decisions: weighing pros and cons and regulatory innovation
Pros and cons of all approvals.If all applications of 77 institutions are approved, it will convey a positive signal that Hong Kong will embrace financial innovation, attract more institutions to settle in Hong Kong, and enhance market vitality in the short term.However, regulatory resources will face tremendous pressure, and there may be inadequate supervision, increasing financial risks.The issuance of homogeneous stablecoins by multiple institutions may lead to market fragmentation and reduce scale effects.
Pros and cons of selective approval.Selective approval of a few institutions (such as 10-15) can ensure the quality of supervision, reduce systemic risks, and facilitate concentrated resources to cultivate capable institutions.But this may raise questions about fairness, and companies that have not been approved but meet the conditions may file legal lawsuits, damaging Hong Kong’s reputation for the rule of law.In addition, too strict screening may curb market innovation vitality.
5. Policy recommendations: Rational choices to seize historical opportunities
Establish a differentiated regulatory framework.Classified management is implemented for stablecoin issuing entities of different natures and differentiated regulatory requirements are formulated.Implement stricter supervision of systemically important stablecoins and appropriately relax conditions for limited ranges of stablecoins.
Priority to the development of USD stablecoins (USHK).Concentrate resources to develop USHK and build it into Hong Kong’s core competitiveness.Taking advantage of Hong Kong’s rule of law advantages, financial infrastructure and international status, USHK becomes a safer and more transparent US dollar stablecoin option than USDT.
Strictly control the issuance of Hong Kong dollar stablecoins.Maintaining a cautious attitude towards issuing stablecoins in Hong Kong dollars is limited to three banknote issuing banks to ensure coordination with the linked exchange rate system and avoid arbitrage behavior and financial risks.
Prudently promote RMB stablecoin.The development of RMB stablecoins should be strictly limited to the offshore market, with controllable scale to avoid affecting the financial stability of the mainland.Piloting can be carried out first and then gradually expanded after accumulating experience.
Introducing a regulatory sandbox mechanism.In order to balance innovation and risks, a regulatory sandbox mechanism is introduced, allowing enterprises to test new stablecoins and related technologies in restricted environments, providing a practical basis for the improvement of the regulatory framework.
Strengthen the application of regulatory technology.Increase investment, improve the level of regulatory technology, and use technologies such as blockchain, big data and artificial intelligence to achieve real-time monitoring and risk assessment, and improve regulatory efficiency and accuracy.
Give full play to entrepreneurial spirit.Reserve innovation space in the regulatory framework, encourage entrepreneurial professionals to participate in policy formulation and implementation, and avoid overly conservative professional manager thinking hindering financial innovation.
6. Conclusion: Hong Kong’s historical choice
77 stablecoin license applications are both challenges and opportunities.The key choice facing Hong Kong is not simply “sampling or not”, but how to maximize the benefits of stablecoin development through differentiated regulatory and institutional innovation, while minimizing potential risks.
The US dollar stablecoin USHK represents a major historical opportunity in Hong Kong.As a US dollar anchor coin, the Hong Kong dollar will not be affected by the rise of US dollar stablecoins, and it may benefit if done well.Hong Kong is expected to attract other small-scale economies to adopt USHK with its sovereign credibility and financial foundation, which is a major historical opportunity for Hong Kong.
The essence of stablecoin competition is competition among countries. Hong Kong needs to exert its entrepreneurial spirit and balance risk control and innovative vitality.Hong Kong regulators should demonstrate historical responsibility, maintain the rigor of supervision, be innovative and inclusive, and seize the historical opportunities of stablecoin development.
Hong Kong has the conditions to become a leader in global stablecoin development, but this requires wise decision-making, innovative supervision and a courageous entrepreneurial spirit.The approval decisions for the 77 applications will become a touchstone for testing the quality of Hong Kong’s International Financial Center and a key battle to determine whether Hong Kong can continue to maintain competitiveness in the digital economy era.
