Hong Kong's stablecoin regulation is about to take effect, and the license competition begins

Author: ChandlerZ, Foresight News  

The official implementation of Hong Kong's stablecoin licensing regime is just days away. The Hong Kong Monetary Authority (HKMA) has released documents including the *Guidelines for Licensed Stablecoin Issuers*, *Guidelines on Anti-Money Laundering and Counter-Terrorist Financing (Applicable to Licensed Stablecoin Issuers)*, *Summary of the Stablecoin Issuer Licensing Regime*, and *Summary of Transitional Provisions for Existing Stablecoin Issuers*.  

Concurrently, the HKMA held a technical briefing on the stablecoin issuer regulatory regime. According to the established timeline, institutions intending to apply must engage with the regulator by August 31 and submit formal applications by September 30. It is expected that only a single-digit number of licenses will be issued in the first batch, with the earliest possible implementation by the end of the year.  

As policies gradually take effect, market movements have emerged. According to *Ming Pao*, JD Digits’ JD Coin Chain has registered the names "JCOIN" and "JOYCOIN," which the market speculates are its stablecoin names. A consensus is forming: Hong Kong is officially entering the era of stablecoin regulation. Compliance definitions are becoming clearer, and the intentions of participating institutions are beginning to surface.  

### License Quantity Unconfirmed; Early Stablecoin Holders Required to Be Identified  

Regarding the application process, the HKMA encourages intending applicants to express their interest by August 31, 2024, and submit formal application materials by September 30. Entry into the "sandbox testing" does not guarantee automatic license approval, and non-participants may also apply. The key lies in the maturity and compliance of the application proposal. Regulatory requirements cover reserve asset management, risk control, corporate governance, issuance and redemption mechanisms, anti-money laundering (AML), and counter-terrorist financing (CTF), among other areas, and must adhere to international standards such as the FATF "Travel Rule."  

*Image source: National Business Daily*  

According to the HKMA’s latest explanation, there is no fixed quota for stablecoin issuer licenses. Applications will be evaluated individually based on the maturity of materials, risk management capabilities, and business feasibility, with no quota limits. Participation in sandbox testing will not be a priority for approval. Additionally, the HKMA will not disclose the list of applicants, emphasizing that the licensing process will remain highly prudent and non-public.  

The HKMA maintains an open attitude toward the fiat currencies that stablecoins are pegged to, supporting both single-fiat and basket-of-fiats pegs. However, for non-fully convertible currencies such as the RMB, assessments will be conducted cautiously based on specific use cases and reserve mechanisms. To accommodate existing stablecoin issuers operating in Hong Kong, the regulatory regime includes "transitional arrangements," allowing eligible entities to continue operations with a temporary license for six months.  

To protect stablecoin issuers that conducted substantial business in Hong Kong before the regime took effect, the HKMA has established transitional arrangements. Relevant institutions may submit license applications within three months of the ordinance’s生效. Upon confirmation of their ability to comply, they will be permitted to operate with a temporary license for six months until final approval is granted.  

Unlike the relatively lenient whitelist model of the past, the new regulatory regime emphasizes strong supervision and high transparency. Licensed stablecoin issuers must implement real-name management, with holders’ identities verified by the issuer, regulated financial institutions, or trusted third parties. Furthermore, application materials must comprehensively cover reserve asset arrangements, compliance governance, AML mechanisms, technical architecture, and risk control plans, reflecting higher regulatory demands on applicants’ operational capabilities.  

Notably, the HKMA has repeatedly stated that the core criterion for license approval is not limited to reserve asset levels but also depends on whether the applicant’s stablecoin business model has practical use cases and sustainability. The regulator maintains a "strict first, flexible later" approach, with cautious licensing节奏 in the early stages to prevent market bubbles and concept speculation, emphasizing the steady advancement of Hong Kong’s digital asset ecosystem for long-term sustainability.  

### Regulatory Framework Clarified on the Eve of Legal Enforcement  

In terms of regulatory structure, the HKMA’s *Guidelines for Licensed Stablecoin Issuers* form the core of the regime, setting high-standard, granular compliance requirements across seven areas: reserve asset management, issuance and redemption mechanisms, business scope, financial resource requirements, risk management, corporate governance, and operational conduct.  

Reserve asset management explicitly requires stablecoins to be 100% fully backed, with reserve assets limited to highly liquid, low-risk cash management instruments such as cash, short-term bank deposits, high-rated short-term bonds, and overnight reverse repos. These assets must be held in segregated trust arrangements, and custodians must meet minimum standards. Additionally, stablecoin issuers are prohibited from paying interest to users, must maintain daily internal accounts, disclose key data weekly, and undergo regular audits by independent auditors.  

For issuance and redemption, the guidelines require licensed stablecoin issuers or their distribution partners to strictly adhere to customer suitability rules, refrain from providing services in restricted regions, and use identity verification and geolocation technologies to mitigate compliance risks. Redemption policies also require detailed disclosure, including clear statements of users’ redemption rights, processing timelines, and fees, with regular reviews of the reasonableness and effectiveness of issuance and redemption mechanisms.  

Regarding financial resources, applicants must have a paid-up capital of no less than HK$25 million, with net assets not derived from external borrowing—reflecting the HKMA’s emphasis on the sustainability and risk-bearing capacity of stablecoin businesses. If an applicant plans to issue multi-currency stablecoins, additional communication with the HKMA will be required on currency composition ratios and potential mismatch risks.  

For management and governance, the regulator explicitly requires applicants to be legal entities, with directors, senior executives, and stablecoin managers possessing relevant knowledge and experience. Key personnel must be resident in Hong Kong, and individuals may be required to attend interviews with the HKMA during the application stage.  

Combined with the application process outlined in the *Summary of the Licensing Regime*, the entire procedure includes five steps: initial intention communication, cross-border regulatory coordination (if applicable), document preparation, advisory committee review, and final approval—emphasizing prudence and information transparency. The documents also list detailed application materials, including a three-year-plus business plan, three-year financial projections, and compliance plans.  

### JCOIN and JOYCOIN Emerge  

JD Coin Chain, a subsidiary of JD.com, has registered "JCOIN" and "JOYCOIN," which the market speculates are its stablecoin names. Registration details indicate that related services include electronic fund transfers and cryptocurrency financial transactions via blockchain technology. JD Coin Chain is a participant in the HKMA’s stablecoin issuer sandbox program and collaborated with Skye Bank in July last year to test a stablecoin-based cross-border payment solution for enterprises.  

JD Coin Chain Technology was registered in Hong Kong in March 2024 and became one of the first three institutions to enter the HKMA’s "Stablecoin Issuer Regulatory Sandbox" in July. In an interview with *Bloomberg Businessweek*, JD Coin Chain CEO Liu Peng stated that the company plans to launch payment-oriented stablecoins pegged to the Hong Kong dollar and other major fiat currencies, with plans to complete license applications, stablecoin issuance, and listing on compliant trading platforms simultaneously in early Q4.  

Unlike the asset属性 of cryptocurrencies, JD’s stablecoin is positioned as a "payment tool," issued on a public chain architecture with an emphasis on transparency, auditability, and regulatory compliance. Against the backdrop of Hong Kong’s *Stablecoin Ordinance* taking effect on August 1, JD Coin Chain leverages its parent company JD Group’s full-link resources in e-commerce, payments, and supply chains to率先 test applications in the retail场景 of JD Global’s Hong Kong and Macau stations, with future expansion to cross-border trade settlement and compliant investment transaction scenarios.  

Technically, JD’s stablecoin transactions can be processed in seconds, with significantly lower fees compared to traditional cross-border payment models. Initial tests show significant cost and efficiency advantages. Furthermore, in Liu Peng’s view, while the current stablecoin market is dominated by USDT and USDC, compliant stablecoins centered in Hong Kong, operated by licensed institutions, and serving traditional trade and payment enterprises have the potential to carve out a new niche. JD Coin Chain prioritizes compliance as its core competitiveness, planning to collaborate with compliant financial institutions to provide on-chain payment and financing services for SMEs, and promote improved capital settlement efficiency across industries through customized scenario solutions.  

### Summary  

As Hong Kong’s stablecoin regulatory regime enters its final countdown, market players have already begun taking action, and the regulatory framework is becoming complete. With clear policies and rules in place, stablecoins are moving beyond crypto narratives to real-world applications in payment infrastructure and trade clearing and settlement. While the first batch of licensed institutions remains unannounced, regulators have clearly signaled that quantity is not the priority—quality and sustainability are. Those who balance compliance, risk control, and practical application will likely be the first to unlock the true interface between on-chain finance and the real economy.  

Disclaimer: The views in this article are solely those of the author and do not constitute investment advice on this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, or timeliness of the information in the article, nor does it assume liability for any losses arising from the use or reliance on such information.