Bank of China (Hong Kong) has reportedly initiated efforts to apply for a stablecoin issuer license, as disclosed by unnamed sources in the Hong Kong Economic Journal. The bank aims to be part of the first batch of entities approved under Hong Kong’s new regulatory framework for stablecoins, which mandates licensing by the Hong Kong Monetary Authority (HKMA) and strict compliance with capital and asset-backed requirements. The first round of applications is due by the end of September 2025. Neither the bank nor the HKMA has commented publicly on the matter [1].

Hong Kong’s regulatory environment for stablecoins has significantly evolved with the enactment of the Stablecoins Ordinance (Cap. 656) on August 1, 2025. The ordinance creates a legal framework for fiat-referenced stablecoins, requiring issuers to obtain a license from the HKMA. This includes a minimum capital requirement of HK$25 million and the obligation to back all stablecoins with high-quality liquid assets such as short-term government bonds. The framework excludes central bank digital currencies and bank deposits, focusing instead on stablecoins pegged to official currencies or units of value designated by the HKMA. These measures aim to promote institutional credibility and public trust in the stablecoin ecosystem [3].

The licensing process for stablecoin issuers is structured to be invitation-only and phased, reflecting the HKMA’s cautious approach to balancing innovation with risk mitigation. The stringent regulatory landscape has already prompted market reactions, with major exchanges such as BitMart withdrawing applications for virtual asset service provider licenses in Hong Kong. This trend underscores the industry’s recalibration in response to the city’s high compliance standards, particularly for issuers required to maintain cold storage of 98% of client assets and insurance coverage for both hot and cold storage holdings [3].

The new regulatory environment positions Hong Kong as a potential global hub for digital finance, especially in the context of multicurrency stablecoins and the internationalization of the RMB. The framework supports stablecoins tied to the Hong Kong dollar, U.S. dollar, and offshore renminbi, facilitating cross-border transactions and potentially reducing reliance on traditional systems such as SWIFT. This development could significantly benefit emerging markets by enabling faster, cheaper, and more transparent financial services, particularly for retail users and small businesses [3].

While the regulatory advancements aim to curb fraud and enhance consumer protection, recent incidents highlight the persistent risks in the stablecoin space. A notable case involved three individuals who were arrested for defrauding a 77-year-old woman of HK$3 million through stablecoin-related schemes. Although the new ordinance prohibits unlicensed stablecoin issuance, fraudsters continue to exploit gaps, particularly in fiat transactions that may bypass intense blockchain scrutiny. This reinforces the need for ongoing regulatory adaptation and investor education to mitigate risks associated with the volatile and often opaque nature of the stablecoin market [2].

Source:

[1] Bank of China (Hong Kong) plans to apply for a stablecoin issuer license (https://news.futunn.com/en/flash/19316759/media-bank-of-china-hong-kong-plans-to-apply-for)

[2] The Surge of Stablecoin Deceptions in Hong Kong (https://www.onesafe.io/blog/stablecoin-scam-hong-kong-regulations)

[3] Hong Kong's Stablecoin Rules Set Gold Standard for Digital Finance (https://www.bitget.com/news/detail/12560604938198)