New Trends in Hong Kong's Stablecoin Regulation: Balancing Risk Prevention and Speculation Avoidance

Hong Kong will officially implement the "Stablecoin Regulation" on August 1. The Financial Management Bureau plans to announce a summary of the "Stablecoin Issuer Licensing System" starting from July 28. This guideline will provide applicants with more detailed information and clarify the specific requirements for stablecoin issuers regarding anti-money laundering, reserve management, and information disclosure.

Recently, the President of the Hong Kong Monetary Authority, Yu Weiwen, published an article titled "Stablecoins for Steady Progress and Long-Term Development," calling for "avoiding excessive speculation" and preventing the conceptualization and bubble trend of stablecoins, while emphasizing the need to strictly guard against financial risks. Currently, three groups of testers are participating in the stablecoin sandbox testing. According to industry insiders in Hong Kong, there are already 50-60 companies interested in applying for a Hong Kong stablecoin license, including central state-owned enterprises, financial institutions, and internet giants.

Yu Weiwen pointed out in the article that the recent market discussion on stablecoins still needs to cool down, and it is necessary to guard against excessive speculation. He mentioned two main issues: first, excessive conceptualization, as many institutions are only staying at the theoretical level, lacking specific application scenarios and risk management capabilities; second, a trend of bubble formation, as some listed companies unrelated to stablecoins have seen their stock prices surge after claiming to enter this field.

Yu Weiwen emphasized that Hong Kong regulators may initially approve only a few stablecoin licenses. He also warned that promoting unlicensed stablecoins to the public in Hong Kong will be illegal once the "Stablecoin Regulation" takes effect. Hong Kong's Financial Secretary, Paul Chan, also stated that stablecoins should not become a subject of speculation, and the digitization of asset markets is a long-term process.

Industry analysts believe that Hong Kong may adopt a similar invitation application system to arrange the issuance of stablecoin licenses. Hong Kong is likely to form a "US dollar stablecoin connecting to the international market + Hong Kong dollar stablecoin linking to the mainland" dual-track regulatory framework, which not only consolidates the financial attributes of the Hong Kong dollar but also provides a "testing ground" for the internationalization of the Renminbi.

In terms of custody services, multiple banks are actively positioning themselves. Some institutions have chosen ZhongAn Bank and Deutsche Bank as their custodians, while Standard Chartered Bank and Tianxing Bank are also potential choices. Chinese banks such as China Merchants Yonglong Bank have also increased their efforts in promoting stablecoin custody services.

With the impending implementation of the Stablecoin Regulations, the Hong Kong stablecoin market will usher in a new landscape. It is expected that stablecoins will play a more important role in cross-border payments and the digital asset market in the future. However, strict regulation in the short term will ensure that market participants have sufficient technology and risk management capabilities to effectively mitigate financial risks.