Hong Kong’s Monetary Authority (HKMA) said early Monday it would only approve a few licenses for stablecoin deployment, despite the 77 agencies already showing interest. The number has arrived at the end of August.
It’s a genuine stampede. Reports from local media show that banks, e-commerce platforms, tech companies, web3 startups, payment companies and asset managers are all on the list.
Among the biggest names chasing this license is China Industrial and Commercial Bank (ICBC), the world’s largest bank by assets. It is applied through Hong Kong’s arm ICBC (Asia).
It intervenes in the second top tier Chinese bank after the Bank of China (Hong Kong). HSBCHong Kong’s largest bank has not yet filed, but is turning.
Lawmakers say the rules are strict and there is only one license that may come in early 2025.
Lawmakers support HKMA’s strict approach. According to NG Kit-Chong, a member of Hong Kong’s Legislative Council, the new rules are strict in design.
“The number of licenses issued will be very few,” he said. I saidadded that “probably one license” might come early next year. And that’s not all. Lawmakers are also preparing new laws for offline OTC Crypto transactions that could unfold in 2025.
HKMA has instructed applicants to submit a full application in serious cases by the end of September. But it warned everyone: submitting interest or even full application does not mean approval. They don’t give trophies to participate.
Also, the public is told not to trust ads or promotions linked to stablecoins without a license because they are not legally recognized.
“The administration will exclude those who are not in line with strict regulations, create viable use cases and demonstrate economic stability,” said Amina Group attorney Cora Ang. Her point? If you’re not ready, you’re out. She added that after disasters like FTX, regulators are taking zero chances. “They don’t want the recognition that their administration is not robust enough. That’s a reputational risk,” she said.
In 2022, FTX collapsed in the chaos of fraud and money laundering scandals. That confusion is still fresh in the minds of regulators. HKMA doesn’t want some of the repetition.
According to a report from S&P Global Ratings, the first batch of Stablecoin publishers is likely to become a large tech company and a major bank. A small bank? I’m not that lucky. According to S&P, if they try to maintain a stable balance sheet, they could be slapped at a capital fee as high as 1,250%. It’s basically too expensive for them to even try.
Ng Kit-Chong also said data assets, including Bitcoin, are currently being added to domestic and corporate reserves in several countries. “That has become an inevitable trend,” he said. In other words, a stubcoin is just one of a huge pie.
Do not read Crypto News alone. Understand that. Subscribe to our newsletter. It’s free.
