Hong Kong to Issue First Stablecoin Licenses in March Despite China’s Crypto Ban

Hong Kong’s central bank is moving ahead with plans to issue an initial batch of stablecoin licenses in March, despite China’s longstanding opposition to cryptocurrency activity.

The Hong Kong Monetary Authority (HKMA) is reviewing 36 applications for issuers under the city’s Stablecoins Ordinance, which came into effect in August and requires licenses for entities issuing stablecoins pegged to the Hong Kong dollar.

Eddie Yue, HKMA Chief Executive, told a Legislative Council meeting on February 2, noting the authority’s review of the initial tranche of applications.

Stablecoins are cryptocurrencies designed to maintain a stable value by linking to assets such as fiat currencies or gold, reducing volatility compared with other digital tokens, according to CNBC.

The HKMA cited potential use cases including cross-border payments and tokenised deposit systems for international banks, which involve digital representations of customer deposits on blockchain networks while remaining regulated within the traditional banking system.

Prospective issuers, such as payments technology firm Payment Cards Group, say Hong Kong dollar-backed stablecoins could enable faster refunds, quicker cross-border payments, and more transparent foreign exchange rates.

Interest in Hong Kong’s licensing regime reportedly includes tech giants like the Alibaba-backed Ant Group and JD.com.

China has maintained a conservative stance on cryptocurrencies, culminating in a full ban on crypto transactions in 2021 due to concerns over volatility, illicit activity, and monetary control.

Beijing also warned against Hong Kong’s stablecoin plans in October, effectively halting progress.

Hong Kong is rolling out stablecoins cautiously to demonstrate proper supervision, strengthen the city’s payments and tokenisation infrastructure, and attract overseas investment.

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