Hong Kong moves ahead with its stablecoin rollout, even as Beijing voices reservations — and the decision is drawing attention across global financial and crypto circles.
Hong Kong’s central bank is moving forward with plans to issue its first batch of stablecoin licenses as early as March, pressing on despite China’s long-standing resistance to cryptocurrency activity. While the move may appear bold, industry experts say it should be seen less as a policy shift and more as a calculated hedge that keeps Beijing’s broader stance intact.
Speaking at a Legislative Council meeting on February 2, Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue said regulators are nearing a decision on the initial group of applicants. The authority is currently reviewing 36 applications from potential stablecoin issuers, signaling serious momentum behind the initiative.
Yue’s update follows earlier reports that Beijing had slowed or stalled Hong Kong’s plans to permit stablecoin issuance, reflecting lingering concerns from mainland authorities.
What Stablecoins Mean for Hong Kong
Stablecoins are a category of cryptocurrencies designed to maintain a steady value by being pegged to traditional assets such as fiat currencies or commodities like gold. Unlike highly volatile digital tokens, stablecoins aim to provide price stability, making them more practical for payments and financial infrastructure.
In May, Hong Kong passed its Stablecoins Ordinance, establishing a licensing regime for companies issuing stablecoins within the city or linking them to the Hong Kong dollar. The law officially came into force in August, shortly after which the HKMA began accepting applications.
According to Jordan Wain, policy advisory lead at blockchain analytics firm Chainalysis, stablecoins now represent more than half of all value transferred directly on public blockchains. This makes them a foundational component of the broader crypto ecosystem rather than a fringe innovation.
In internal guidance, the HKMA has pointed to cross-border payments and tokenized deposit systems for international banks as potential real-world use cases. Tokenized deposits are blockchain-based digital representations of traditional bank deposits, operating within existing regulatory frameworks.
Industry Interest and Regional Momentum
Several prospective issuers believe Hong Kong dollar-backed stablecoins could significantly improve payment efficiency. Payment technology firms argue they could enable faster refunds, smoother cross-border transactions, and clearer foreign exchange pricing.
Wain noted that regulators worldwide are warming to stablecoins as legitimate financial tools. Jurisdictions such as Japan and parts of Europe already have regulatory frameworks in place, creating momentum that Hong Kong appears eager to match.
Reported interest in Hong Kong’s licensing system has included major Chinese technology and e-commerce firms, underlining the commercial potential of a regulated stablecoin environment.
Beijing’s Deep-Seated Crypto Concerns
Despite Hong Kong’s enthusiasm, Beijing remains cautious. In October, Chinese regulators reportedly advised against the stablecoin initiative, effectively freezing progress for a period.
Although Hong Kong operates under the “one country, two systems” model and retains regulatory autonomy, major financial decisions are still influenced by Beijing. Mainland China has taken a consistently conservative approach to cryptocurrencies, tightening controls as early as 2013 and culminating in a sweeping ban on crypto transactions in 2021.
Authorities have cited concerns ranging from market volatility to illicit financial activity. One recent report found that stablecoins are frequently used by organized crime networks in China to move illegal funds, with tens of millions of dollars transferred daily through complex channels.
Beyond crime, analysts say Beijing’s primary worry is monetary control. Academic Monique Taylor explains that stablecoins — especially those linked to national currencies — could circulate beyond borders and outside regulatory oversight.
Stablecoins, she argues, challenge state authority over money, payments, and capital flows, which clashes with China’s tightly controlled monetary governance model.
A Controlled Experiment, Not a Policy Reversal
Beijing is also wary of the growing dominance of U.S. dollar-backed stablecoins in the digital asset economy, a trend sometimes described as “digital dollarization.” Similar sensitivities have surfaced in the United States, where officials have questioned whether Hong Kong’s crypto ambitions could be interpreted as an alternative to American financial leadership.
Taylor believes Hong Kong’s approach is intentionally limited. Rather than signaling a reversal of China’s crypto ban, the licensing framework appears designed as a cautious experiment — one that allows authorities to test regulatory oversight without fully embracing digital assets.
That view was reinforced recently when multiple Chinese regulators issued a joint statement reaffirming the country’s ban on crypto-related activities, including unauthorized yuan-backed stablecoins.
What Comes Next
According to Wain, Hong Kong’s initial licenses are about demonstrating that stablecoins can be tightly supervised while still supporting payments innovation, tokenization, and broader Web3 ambitions. This regulatory clarity could attract overseas investors eager to participate in a controlled, compliant stablecoin market.
However, analysts caution that Hong Kong is unlikely to permit a freewheeling crypto environment. Instead, the city appears to be carving out a narrow, regulated path — advancing innovation while staying firmly within political and monetary boundaries.
In short, Hong Kong moves ahead with its stablecoin rollout, even as Beijing voices reservations, but the move reflects careful balancing rather than defiance — a measured step into digital finance without abandoning caution.
