Hong Kong Initiates Stablecoin Licensing by Invitation Only

The Hong Kong Monetary Authority (HKMA) will implement “Stablecoin Regulation” beginning August 1, 2025, through an invitation-based licensing system for interested applicants.

The regulation aims to enhance market transparency and supervision, restricting initial licenses to a few established players. This selective process may limit smaller entities.

Hong Kong to Introduce Invitation-Only Licensing for Stablecoins

The HKMA has announced a new regulatory framework for stablecoins effective from August 1, 2025. The approach will differ from the traditional format as the license application will be managed through a pre-qualification invitation system. The move aligns with other major jurisdictions like the EU’s MiCA regulation, indicating increased scrutiny on stablecoin markets.

Three factors will change the market dynamics. First, by limiting licenses to a single-digit figure, regulatory bodies aim to ensure stringent control. Second, this strategy will likely favor large, established financial institutions. Smaller innovators may find it challenging to enter without prior relationships with regulators.

Among the notable reactions, Christopher Hui, Secretary for Financial Services and the Treasury, emphasized the HKMA’s proactive approach by consulting stakeholders. He stated, “The Monetary Authority is consulting the market to implement the regulatory guidelines … applications for stablecoin licenses will be accepted, with the goal of issuing licenses within this year, and the number of licenses will be a single digit” (source). Despite no price movement among prominent stablecoins like USDT and USDC, crypto forums remain vigilant as the regulation’s effects unfold.

Stablecoin Market Dynamics: Limited Licenses and Global Implications

Did you know? Stablecoin regulatory frameworks like the EU’s MiCA began a year earlier, reflecting a global trend towards tightening control over digital assets, driven by market stability objectives.

According to CoinMarketCap, Tether (USDT) retains its stability with a price of $1.00 and a market cap of 161.75 billion. It marks a 24-hour trading volume shift of 52.72%, with minimal long-term changes in its price. With a 4.18% market dominance, USDT remains a key player in crypto exchanges as of July 21, 2025.

Market implications, as analyzed by the Coincu research team, point towards a narrowing field of eligible participants within Hong Kong’s new licensing model. Stablecoin issuers, both local and global, will need to adapt to these restrictive measures by leveraging existing regulatory relationships. For further legislative details, refer to the Bill Brief: Legislative Council Document for 2024 Session. Potential for regulatory spillover into other financial hubs is anticipated. For instance, the Cayman Islands is introducing more stringent crypto firm regulations.