• Hong Kong is set to launch stablecoin licensing by August 2025, with limited initial approvals.
• Global leaders warn stablecoins may threaten monetary sovereignty if left unregulated.

Hong Kong is gearing up to launch its stablecoin licensing framework as early as August 2025.

Only a limited number of licenses, likely in the single digits, will be granted at the start, according to Christopher Hui, Secretary for Financial Services and the Treasury.

Remarking on the same, in the report, Hui noted that stablecoins will serve to ‘address the difficulties and pain points in the real economy.’

He explained that one of the most valuable use cases is improving cross-border payments, especially in regions with unstable local currencies or underdeveloped financial systems. 

In such areas, sending money across borders can be slow, expensive, and unreliable.

Hui further added, 

“If there are stablecoins based on fiat currencies serving as effective payment tools, they can facilitate cross-border transactions and reduce transaction costs.”

However, approving such tokens would require close coordination with regulators in other jurisdictions to manage risks like exchange rate volatility and systemic financial impact.

Not everything is pegged to the dollar

Following the approval of the Stablecoins Bill, the Hong Kong Monetary Authority (HKMA) launched a consultation on draft supervision guidelines.

The upcoming directives will clarify the minimum standards under the Stablecoins Ordinance. These include full asset backing and client asset segregation and require strict redemption obligations for stablecoin issuers.

Initially, the framework focused on stablecoins pegged to the Hong Kong dollar. However, interest is growing in offshore yuan-backed tokens. 

Major Chinese firms like JD.com and Ant Group are reportedly seeking approval from Beijing.

Notably, Christopher Hui emphasized a key regulatory point. He said, any yuan-pegged stablecoin must be discussed with the relevant monetary authorities. 

This is because it involves the currency of another jurisdiction.

Will it be able to compete against the U.S. market?

Despite its growing efforts, Hong Kong faces significant global challenges in the stablecoin race, particularly from the United States.

Currently, the U.S. dominates the stablecoin market, with USDT and USDC accounting for the vast majority of usage across both centralized and decentralized finance platforms. 

This dominance is being further reinforced by regulatory momentum.

The GENIUS Act, a landmark U.S. stablecoin bill, recently passed the Senate with bipartisan support and is now advancing through the House of Representatives. 

Backed publicly by President Donald Trump, the bill aims to establish a national regulatory framework for fiat-backed stablecoins.

Meanwhile, Hong Kong has begun building its framework, but it remains limited in scope, focusing primarily on regional currency backing and issuing licenses cautiously.

Therefore, to compete globally, Hong Kong must overcome geopolitical tensions, economic constraints, and structural limitations, even as it emerges as a promising digital asset hub in Asia.