The Hong Kong Monetary Authority (HKMA) said early Monday that it will approve only a few licenses in its stablecoin rollout, even though 77 institutions have already shown interest. That number came in at the end of August.
It’s a full-blown stampede; banks, e-commerce platforms, tech firms, Web3 startups, payment companies, and asset managers are all on the list, according to reporting from local media.
Among the biggest names chasing this license is the Industrial and Commercial Bank of China (ICBC), the largest bank in the world by assets. It’s applying through its Hong Kong arm, ICBC (Asia).
That makes it the second top-tier Chinese bank to step in, after Bank of China (Hong Kong). HSBC, the biggest bank in Hong Kong, hasn’t filed yet, but it’s circling.
Legislators say rules will be tough, and only one license might come early 2025
Lawmakers are backing HKMA’s strict approach. According to Ng Kit-chong, a member of Hong Kong’s Legislative Council, the new rules are tight by design.
“The number of licenses to be issued will be very small,” he said, adding that “possibly one license” might even come early next year. And that’s not all. Lawmakers are also preparing new legislation for offline OTC crypto transactions, which could roll out in 2025 too.
HKMA has told applicants to submit full applications by end of September if they’re serious. But it warned everyone: submitting interest or even a full application doesn’t mean approval. They’re not giving out trophies for participation.
Also, the public has been told not to trust any ads or promotions linked to unlicensed stablecoins, because they’re not legally recognized.
Cora Ang, legal head at Amina Group, said, “The regime will filter out those unable to align with the strict regulations, produce viable use cases and demonstrate financial stability.” Her point? If you’re not ready, you’re out. She added that after disasters like FTX, regulators are taking zero chances. “They don’t want any perception that their regime is not robust enough – it’s a reputational risk,” she said.
Back in 2022, FTX collapsed in a mess of fraud and money laundering scandals. That mess is still fresh in the minds of regulators. HKMA wants no part of a repeat.
A report from S&P Global Ratings said the first batch of stablecoin issuers will likely be big tech firms and major banks. Small banks? Not so lucky. According to S&P, they could get slapped with capital charges as high as 1,250% if they try to keep stablecoins on their balance sheets. That basically makes it too expensive for them to even try.
Ng Kit-chong also said that data assets, including Bitcoin, are now being added to national and corporate reserves across several countries. “It’s become an inevitable trend,” he said. In other words, stablecoins are just one piece of a huge pie.
