First batch of Hong Kong stablecoin licenses expected to be issued in early 2026

The Hong Kong Monetary Authority (HKMA) has been inundated with applications for the coveted stablecoin issuance license. As many as 80 companies have expressed interest. But regulators say only a select few will be approved when the first batch of licenses is announced in early 2026.

Hong Kong is the first jurisdiction where stablecoin reserves must be backed only by high-quality liquid assets, which are ultra-safe short-term holdings that can be converted to cash on demand.

This strict rulebook has not proven to be a deterrent.

“This is a sign that companies are looking to leverage crypto systems without taking on the more volatile risks of the market,” said Dr Hing Liu, a lecturer in law at the University of Oxford and a digital asset consultant.

JPEX bankruptcy

Liu said the new stablecoin ordinance, which came into effect on August 1, is a concerted effort to rebuild trust in Hong Kong’s digital asset market following a series of scandals.

“The public’s most recent memory of cryptocurrencies is NFT tanking and cryptocurrency scams and scams. The Stablecoin Ordinance shows that Hong Kong is a solid place to do business.”

The latest and largest incident is the collapse of JPEX, an unlicensed cryptocurrency platform that allegedly siphoned approximately $166 million from Hong Kong investors between 2020 and 2023. Hong Kong police are still dealing with the aftermath.

Stablecoin central bank model

Hong Kong brings stablecoin governance under one roof. As the city’s de facto central bank, the HKMA is responsible for the entire stablecoin “stack”, from license issuance to reserve management, storage, redemption, and distribution. The Securities and Futures Commission (SFC) will continue to oversee the broader virtual asset ecosystem.

This is an unusual setting. In most jurisdictions, stablecoins are supervised by a patchwork of securities regulators or financial regulators rather than a single financial authority.

Under the new framework, the HKMA can grant, suspend and revoke licenses and investigate potential violations.

Companies that challenge the HKMA’s decision can appeal to the newly established Stablecoin Review Tribunal and ultimately the Court of Appeal, if necessary.

Joshua Chew, lawyer, law lecturer and co-chairman of the Hong Kong Web3 Association, said the dedicated tribunal “demonstrates a level of regulatory accountability that is still lacking in most jurisdictions”.

“Compared to the US, South Korea and Japan, where disputes can drag on for years in regular courts, Hong Kong courts provide the industry with a reliable, expert-focused reference point,” he said.

Building organizational trust in uncharted territory

A core rule of the Stablecoin Ordinance is that issuers must be able to demonstrate that they have sufficient ultra-liquid assets to redeem any stablecoin in full on demand.

This is a challenge that goes beyond simply designing a strong regulatory framework.

“Maintaining a 1:1 peg every day is important to building trust in this institution,” said Professor Alex Preda, a blockchain researcher at King’s College London.

“The quality of collateral is important, but it does not automatically create trust.”

As volumes grow, issuers need to make intra-day adjustments, something that cannot be done with automation, he said. Preda believes that the emerging field of stablecoins needs to gain institutional trust.

“Hong Kong’s traditional large financial institutions have a wealth of financial expertise, but they don’t have the engineering expertise to automate this kind of balancing.”

Preda said existing players in Hong Kong are likely to partner with companies specializing in digital assets, given the limited know-how in cryptocurrencies.

It’s a trend already underway. Standard Charter’s Hong Kong arm has formed a joint venture with Animoca Brands and HKT to apply for a license for a Hong Kong dollar-backed stablecoin.

Tokenization as reinvention

Hong Kong is rushing to make tokenized assets the backbone of its financial infrastructure. Its tokenization mission is driven by three interlocking frameworks. HKMA’s FinTech 2030 Strategy. Set a comprehensive digital finance agenda for the City. The SFC’s ASPIRe roadmap to regulate tokenized products and the HKMA’s LEAP framework, which outlines the underlying payments infrastructure needed to support them.

Joshua Chew said the city is positioning itself as a highly regulated institutional financial hub.

He said business opportunities are moving toward tokenized funds, asset-backed securities and digital asset custody services, rather than “overvalued models like direct tokenized real estate ownership.”

“These models face structural obstacles such as stamp duty and property transfer rules, as well as the unresolved legal status of tokens.”

This change is already starting to shape the market. On November 13, the HKMA launched the EnsembleTX pilot to test tokenized bank deposits in real value transactions. The project follows the recent issuance of tokenized money market funds and tokenized gold by major banks.

If the pilot is successful, Hong Kong could become one of the first jurisdictions in the world to integrate tokenized deposits directly into banking infrastructure.

Missing parts of Hong Kong’s digital asset framework

However, Chu said several gaps need to be filled before Hong Kong’s tokenization framework can be operationalized at scale.

He said trading in tokenized securities remains low because the city has not yet built the necessary market infrastructure for investors to easily buy and sell these products. He added that regulators have not yet detailed what protections and disclosures retail investors will receive if these products eventually become widely available.

The city also faces the technical challenge of building a system that allows different blockchains to interact, but in a way that respects the regulatory boundaries of both Hong Kong and Beijing.

Chu pointed out that regulators are also restricting the use of stablecoins to pre-approved users and wallets. This is a requirement that prevents them from functioning like open circulating payment instruments.

For regulators, that boundary is a feature, not a flaw. This is a way to show that cities can innovate without incurring the kind of volatility that has disrupted crypto markets.

As tokenization spreads to more parts of the financial system, Hong Kong’s ability to maintain that balance will determine how far its ambitions can go, and how much of the global market it can realistically claim.