The Hong Kong Monetary Authority to Approve Limited Licenses in Stablecoin Rollout
The Hong Kong Monetary Authority (HKMA) announced on Monday that only a few licenses will be approved in its stablecoin rollout, despite 77 institutions expressing interest as of the end of August.
Various entities such as banks, e-commerce platforms, tech firms, Web3 startups, payment companies, and asset managers are vying for a spot on the list, as reported by local media.
One of the prominent names seeking a license is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank in terms of assets. ICBC is applying through its Hong Kong subsidiary, ICBC (Asia).
Another major player in the Chinese banking sector, Bank of China (Hong Kong), has already submitted its application. HSBC, the largest bank in Hong Kong, is also considering entering the fray.
Legislators Emphasize Stringent Rules with Potential License Issuance in Early 2025
Lawmakers are supporting HKMA’s rigorous approach to the stablecoin licensing process. Ng Kit-chong, a member of Hong Kong’s Legislative Council, highlighted the stringent nature of the new regulations.
He stated, “The number of licenses to be issued will be very small, with possibly only one license being granted as early as next year.” Additionally, lawmakers are working on new legislation concerning offline OTC crypto transactions, expected to be implemented by 2025.
Interested applicants have been instructed to submit comprehensive applications by the end of September. However, HKMA has cautioned that submission does not guarantee approval, emphasizing the need for adherence to the established criteria.
The public has also been advised to avoid engaging with advertisements or promotions related to unlicensed stablecoins, as they lack legal recognition.
Cora Ang, legal head at Amina Group, emphasized the importance of meeting the strict regulations, demonstrating viable use cases, and ensuring financial stability to navigate the approval process successfully.
Regulatory Focus on Financial Stability and Compliance
Referring to past incidents like the FTX debacle in 2022, regulators are prioritizing robust oversight to prevent fraud and money laundering scandals. The fallout from such events has underscored the importance of maintaining a strong regulatory framework.
According to a report from S&P Global Ratings, the initial batch of stablecoin issuers is likely to consist of major tech firms and banks, with smaller banks facing potential capital charges of up to 1,250% if they engage in stablecoin activities.
Ng Kit-chong highlighted the growing trend of incorporating data assets, including Bitcoin, into national and corporate reserves worldwide. This development emphasizes the evolving landscape of digital assets and their impact on financial systems.