Chen Maobo Reaffirms Commitment to Stablecoin Regulation and Digital Asset Development in Hong Kong

In a blog post titled “Accelerating Progress, Setting Sail Steadily” published on June 15, Hong Kong Financial Secretary Paul Chan Mo-po stated that following the enactment of the Stablecoin Regulations, the Hong Kong Monetary Authority (HKMA) will expedite the review of license applications to enable qualified applicants to begin operations promptly.

Chan also revealed that Hong Kong is preparing to release a second policy statement on digital asset development. This forthcoming announcement will outline the government’s policy vision and strategic direction, including measures to integrate the strengths of traditional financial services with technological innovations in the digital asset space, enhance the safety and flexibility of digital assets in real-world applications, and encourage local and international enterprises to explore innovation and practical applications of digital asset technologies.

The Stablecoin Regulations were passed by the Legislative Council on May 21 and officially gazetted on May 30. The regulations establish a licensing regime for fiat-backed stablecoin issuers and are scheduled to take effect on August 1. Chan acknowledged that the initiative has attracted significant attention from the market, noting that “many market participants have shown keen interest.”

Ant Digital Technologies, a subsidiary of Ant Group, recently announced it has initiated the application process for a Hong Kong stablecoin license and has held multiple rounds of discussions with regulatory authorities. Ant International, another Ant Group entity, is also seeking a stablecoin license in Singapore. JD Currency Chain Technology, under JD.com, was named among the first batch of stablecoin sandbox participants by the HKMA last year. CEO Liu Peng stated that the company is actively engaging with the HKMA and regulators in other regions to advance the compliant global expansion of its stablecoin operations. Reports also suggest that some banks are preparing to enter the space.

Chan emphasized that once the regulations are in effect, the HKMA will move swiftly to process license applications, allowing qualified applicants to commence operations and generate new opportunities for Hong Kong’s real economy and financial services sector. Issuers will be required to meet standards related to risk management and anti-money laundering, and must also present clear commercial justifications, such as specific use cases. These should demonstrate the feasibility of their stablecoin offerings in addressing pain points in economic activity, aligning financial innovation with the real economy, and supporting sustainable industry growth.

“The global market capitalization of stablecoins is estimated at around USD 240 billion, while the transaction volume exceeded USD 20 trillion last year,” Chan noted. “As the digital asset market continues to expand, demand for stablecoins is expected to increase.” Stablecoins are digital assets pegged to fiat currencies or specific assets to maintain price stability. Fiat-backed stablecoins, in particular, are seen as potential tools to bridge the financial system and the real economy by leveraging blockchain’s security and efficiency along with fiat currency’s stability. Their ability to operate outside the constraints of traditional payment systems and support programmable functions enables automation and innovation in financial services.

Chan stated that Hong Kong’s cautious yet progressive approach to stablecoin development can serve as a global model and provide reference for national financial strategies. Hong Kong's open regulatory framework allows licensed issuers to choose different fiat currencies as anchors for stablecoin issuance. This approach is expected to attract global institutions to issue stablecoins in Hong Kong based on practical applications, thereby increasing liquidity and enhancing the city's market competitiveness.

He also highlighted the resilience and growth of Hong Kong’s financial markets despite ongoing global uncertainties. The Hang Seng Index has gained more than 3,800 points year-to-date, a rise of approximately 20%, placing it among the top-performing global indices. As of May, average daily turnover in the stock market had increased about 1.2 times year-on-year to HKD 242 billion. IPO fundraising reached nearly HKD 79 billion, and secondary offerings exceeded HKD 150 billion, placing Hong Kong among the leading global markets.

“Many cornerstone investors in large IPOs have come from Europe, the U.S., the Middle East, and other parts of Asia. The trend of international capital increasing its allocation to Hong Kong equities has become increasingly evident,” Chan said. “In addition, rising bank deposits and low interbank rates confirm growing investor confidence in Hong Kong’s financial market.”
Asset and wealth management also showed solid growth. By the end of March 2024, the number of registered funds in Hong Kong reached 976, with net inflows exceeding USD 44 billion year-on-year—an increase of 285%.

Chan expressed confidence that Hong Kong could become the world’s largest cross-border asset management hub within two to three years. He also noted a continued rise in the number of professionals entering the financial industry, with applications for licenses under the Securities and Futures Ordinance recording double-digit growth year-on-year.

In addition to equities and asset management, Hong Kong has made significant advances in digital finance, green finance, and the offshore renminbi market. Since issuing its first digital asset policy statement at the end of 2022, the sector has seen rapid growth, with numerous companies establishing or expanding their presence in Hong Kong. To date, 10 virtual asset trading platforms have received licenses, with the Securities and Futures Commission reviewing eight more applications. Regulatory frameworks for custody and over-the-counter trading are also being developed.
The digital asset sector has also driven new business for financial institutions. In 2023, digital asset and related product transactions handled by Hong Kong banks totaled HKD 17.2 billion. As of the end of the year, digital assets held in bank custody reached HKD 5.1 billion.