Hong Kong’s Stablecoin Licenses Narrow Field to Major Banks

As of August 1, 2025, Hong Kong’s new stablecoin licensing regime is challenging non-financial entities, with major banks like Bank of China Hong Kong vying for limited licenses.

The regime tightens market access, favoring established financial giants, potentially sidelining tech firms and impacting cross-border payment developments.

Banks Gain Ground as Tech Firms Face Regulatory Hurdles

Sources indicate that Hong Kong’s stablecoin initiative will initially favor major banks such as Bank of China Hong Kong, leaving high-profile tech firms behind. This disparity arises from strict requirements including verifying every token holder’s identity. As the regime proceeds, financial giants are anticipated to get the first licenses, potentially reshaping the market structure by sidelining non-banking entities.

According to Leslie Fong, a financial analyst, “The regime enforces a high bar for entry,” pressuring tech firms with burdensome KYC/AML protocols. The scrutiny has spurred discussions about whether the banking sector’s early involvement will steer the stablecoin landscape toward a regulated, centralized model, possibly at the cost of innovation from more nimble, tech-driven entities.

Market observers highlight that this focus may limit early-stage sector diversification. A recent HKMA press release notes that compliance standards may lead to a future dominated by financial conglomerates like CITIC Group.

Global Regulatory Trends and Local Market Predictions

Did you know? The EU’s MiCA and Singapore’s Payment Services Act offer rigid compliance frameworks similar to Hong Kong’s regime, highlighting a global trend towards regulating stablecoin markets more intensely.

Ethereum (ETH) currently trades at $3,551.94, with a market cap of $428.75 billion, representing an 11.50% dominance in the market. Recent data from CoinMarketCap indicates a 24-hour trading volume of $21.79 billion, down by 25.05%. Over the past 90 days, ETH has seen a substantial price increase of 97.84%.

Hong Kong’s approach underscores a strategic pivot toward state-linked institutions, puzzling compliance challenges for tech giants.