Hong Kong to grant first stablecoin licences in March

Hong Kong has set March as the target month for approving its first stablecoin issuer licences, even as it prepares a broader legislative push to tighten oversight across the digital asset sector.

In his 2026–27 Budget speech on Wednesday, Financial Secretary Paul Chan confirmed that the city’s stablecoin licensing framework is already in place and that initial approvals for fiat-referenced issuers are expected next month.

Only a handful of companies will receive licences

According to Chan, authorities will continue facilitating licensed operators to explore real-world applications “in a compliant and risk-controlled manner”, signalling a cautious but deliberate rollout.

The stablecoin regime, which took effect after the passage of Hong Kong’s Stablecoins Ordinance last year, requires issuers to meet strict standards on reserves, redemption, and risk management.

Regulators have indicated that only a small number of applicants will be approved in the first phase.

Market participants familiar with the process expect the initial batch to be limited to a handful of institutions.

Alongside stablecoins, the government plans to introduce a bill later this year establishing licensing regimes for digital asset dealers and custodians, extending regulatory oversight beyond trading platforms and stablecoin issuers.

Under Hong Kong’s framework, digital asset dealing refers to carrying on the business of buying, selling, or exchanging virtual assets, including over-the-counter services.

Custodian regulation is expected to formalise standards for safeguarding client assets, an area that has attracted heightened global scrutiny following past industry failures.

Chan also said the Securities and Futures Commission will take further steps to strengthen liquidity in the crypto market and broaden the range of products available to professional investors.

Measures already announced include permitting margin financing and derivatives linked to virtual assets for eligible participants.

The SFC will also establish an accelerator designed to support new product development under regulatory supervision.

Earlier this month, Eric Yip, Executive Director of Intermediaries at the SFC, said the regulator’s 2026 agenda centres on improving market quality rather than expanding access at pace.

This year, Hong Kong plans to focus on “liquidity — cultivating market depth, strengthening price discovery, and building investor confidence through a strategic blend of expanded access and responsible product innovation,” Yip said.

Concerns remain over Hong Kong’s stablecoin plans

Hong Kong’s advance comes against the backdrop of continued resistance from Beijing.

Mainland authorities have repeatedly warned that the city may serve as a controlled testing ground for financial innovation, provided it does not undermine national monetary sovereignty or financial stability.

Last month, the People’s Bank of China, together with seven other regulatory bodies, issued a high-level joint notice reaffirming that the mainland’s prohibition on cryptocurrency activities extends to stablecoins and tokenised real-world assets.

The notice specifically required prior authorisation for any renminbi-pegged stablecoin issued outside the mainland and barred domestic firms or entities under their control from issuing virtual currencies globally without approval.

Regulators in Beijing have framed stablecoins as a potential challenge to the “right of coinage”, expressing concern that privately issued digital tokens could dilute central bank authority and weaken oversight of capital flows.