Hong Kong’s financial heavyweights are scrambling. Over 40 major banks, tech firms, and payment processors seek stablecoin licenses. Applications open August 1st under a new city law. Yet regulators expect just a tiny handful to win approval. This creates an intense competition right now. Local Chinese media reports confirm the strong interest. The Hong Kong Monetary Authority (HKMA) manages the process. They will likely grant only single-digit licenses. As a result, this race is incredibly fierce already. Many prominent firms face potential rejection soon.
Sandbox Offers Early Clues
Only three companies have entered the HKMA’s testing zone so far. This special sandbox helps refine stablecoin plans. Significantly, a joint venture involving Standard Chartered operates there. JD.com’s blockchain unit also participates inside the sandbox. Admission provides crucial regulatory feedback early. However, sandbox entry guarantees nothing later. Participants must still apply formally come August. The very limited sandbox slots strongly hint at future strictness. Regulators clearly plan a very selective approval process.
Key Players
Most applicants are China’s financial and tech giants. Standard Chartered’s venture is a definite contender. JD.com’s blockchain division actively prepares its bid. Ant Group’s digital finance units also plan applications. Both Standard Chartered and JD.com already test in the sandbox. Other firms like Sinolink Securities ready applications too. Logistics tech firm Reitar Logtech tests HKD-pegged tokens. A consortium featuring Ant Group and Standard Chartered works through Animoca Brands. Yuanbi Innovation Technology also participates in sandbox testing.
Strict Rules
The new Stablecoins Ordinance takes effect August 1st. It demands tough standards from all issuers. Firms need substantial capital upfront: HKD 25 million minimum. Reserve assets must fully back every stablecoin issued. These assets require high quality and instant liquidity. Furthermore, issuers must guarantee easy redemption rights. Daily and weekly reporting is mandatory for licensees. Stringent anti-money laundering controls are essential too. Furthermore, compliance costs appear very high.
The HKMA’s caution mirrors another city regulator. The Securities and Futures Commission (SFC) approved few virtual asset licenses. Just 11 trading platforms have gained SFC approval so far. Some hopefuls even withdrew applications earlier. Regulators reportedly found problems at some exchanges then. Hong Kong aims for global stablecoin leadership. This new licensing regime is its latest step. Massive interest proves the strategy’s initial appeal. But extreme selectiveness defines the coming months. Only the most prepared firms will likely succeed. The financial world watches this race closely now.
Written By Fazal Ul Vahab C H
