Hong Kong’s New Stablecoin Ordinance Draws Over 40 Applications

2025-07-10

Hong Kong is witnessing a surge in stablecoin license applications after introducing its new Stablecoin Ordinance. With the law set to take effect on 1 August 2025, over 40 major firms have expressed intent to secure regulatory approval.

This development is shaping Asia’s digital finance market as companies scramble to align with compliance demands while hoping to strengthen their foothold in the crypto sector.

Stablecoin Ordinance Spurs Massive Applications

Hong Kong’s Stablecoin Ordinance represents a major regulatory turning point in Asia’s digital finance landscape. Recent reports show that more than 40 companies have either submitted or are preparing license applications ahead of the ordinance taking effect this August.

This rush for approval highlights a competitive market eager to establish credibility under the new legal framework.

Entities involved include global financial players such as Standard Chartered, which is pursuing a joint venture license, and Ant Group, targeting cross-border payment integration. Circle Innovation, a technology firm linked to stablecoin development, is also among the applicants.

This reflects growing interest from both traditional finance and crypto-native companies seeking to cement their position in the region’s evolving regulatory environment.

However, the ordinance does not guarantee approval for all applicants. Regulatory authorities expect to grant fewer than ten licenses, meaning competition will be fierce. Firms are now allocating significant resources towards compliance to meet the ordinance’s standards, which primarily target fiat-backed stablecoins.

This echoes similar developments in the European Union under MiCA regulations, where tighter compliance requirements have driven market consolidation among established players.

The influx of applications suggests firms see Hong Kong’s regulatory clarity as an opportunity to gain user trust and operational stability.

Yet, caution remains essential. Some projects within the application pool lack transparency, with limited technical documentation or inaccessible whitepapers, raising questions about their long-term credibility.

How Will Stablecoin Regulations Shape Hong Kong’s Market?

The implications of Hong Kong’s stablecoin regulations extend far beyond licensing statistics. First, they are likely to reshape the structure of the digital finance market.

Fewer than ten approvals mean only the most prepared, well-capitalised firms will remain, while smaller or non-compliant players could either relocate or exit entirely.

Secondly, the ordinance mirrors global trends towards tighter regulatory oversight, much like the EU’s MiCA framework.

These changes aim to foster stability and consumer protection, reducing risks of fraudulent or unsustainable stablecoin projects entering the market. For Hong Kong, this strategy could strengthen its reputation as a leading regulated digital asset hub in Asia.

Thirdly, compliance costs are expected to rise. Law firms note that dozens more companies are still preparing applications, suggesting the competitive landscape will become increasingly intense.

This could foster strategic partnerships or mergers among firms seeking to combine their expertise and financial strength to meet regulatory expectations efficiently.

Finally, there is cautious optimism within the banking sector. Alex Zuo, Senior Vice President at Cobo, noted that “most applicants are major Chinese financial institutions and internet companies,” hinting at an impending shift in the region’s digital payment infrastructure.

However, it is important to remain vigilant, as not all firms have released full technical details of their proposed stablecoins, making thorough due diligence crucial before any market engagement.

Challenges Ahead for Applicants and the Broader Sector

Despite the enthusiasm surrounding stablecoin licensing in Hong Kong, significant challenges remain. Compliance demands are set to require extensive legal, operational, and technical upgrades.

Firms must implement robust know-your-customer (KYC) and anti-money laundering (AML) measures to align with the ordinance’s strict requirements, which could prove resource-intensive for even large applicants.

The regulatory authorities have also indicated they will prioritise fiat-backed stablecoins. This preference could limit the growth of algorithmic or crypto-backed stablecoins, narrowing innovation pathways for certain projects.

Additionally, firms entering the licensing process must navigate uncertainties around final regulatory interpretations, operational guidelines, and enforcement standards once the ordinance comes into full effect.

Moreover, while competition is fierce, market consolidation appears inevitable. Historical regulatory trends show that smaller companies lacking resources to meet compliance thresholds are often forced out or absorbed by larger competitors.

This could create a more centralised stablecoin market in Hong Kong, dominated by a few financial giants rather than a diverse ecosystem of innovative players.

Finally, a note of caution for investors and market participants: although license applications are surging, not all projects demonstrate transparency. Inaccessible or incomplete whitepapers on some firm websites should raise questions about their legitimacy and strategic direction.

As the ordinance takes shape, thorough research and careful assessment remain critical in navigating the emerging Hong Kong stablecoin sector.

Conclusion

Hong Kong’s stablecoin ordinance is reshaping its digital finance landscape, with over 40 firms applying for licenses ahead of the 1 August 2025 deadline. While the regulatory clarity is encouraging, competition is intense and approval is far from guaranteed.

The ordinance will likely drive market consolidation and encourage compliance among established players. However, with some projects lacking transparency and full technical disclosures, caution is essential before engaging with any stablecoin firm seeking approval under this new framework.

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