HKMA and SFC Define Robust Entry Requirements for Stablecoin Issuer Licenses; Public Advised to Stay Cautious

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) jointly addressed recent volatility in the stablecoin market, noting that price swings appear linked to announcements, media reports, social-media commentary and market speculation regarding potential applications for stablecoin issuer licenses in Hong Kong, associated activities or feasibility studies. Some reports also referenced recent engagements with local financial regulators.

The HKMA reiterated that it will apply a prudent and conservative approach to reviewing stablecoin issuer license applications, imposing stringent eligibility criteria. It stressed that expressions of interest, the submission of applications and communications with the authority represent preliminary stages in the licensing process, and that final approval will depend on full compliance with all regulatory requirements.

In related analysis, Morgan Stanley signaled a preference for internationally oriented banks with sound valuations among Hong Kong lenders, upgrading its rating on HSBC (00005.HK) and Standard Chartered (02888.HK) to “Overweight.”

Both the HKMA and the SFC urged investors to exercise caution, conduct thorough due diligence and avoid making decisions driven solely by market hype or short-term price momentum. They emphasized that deliberate, evidence-based choices are essential for effective risk mitigation in volatile markets.

The regulators further reminded market participants of their duty to communicate responsibly and to refrain from statements that could mislead investors or foster unrealistic expectations. The SFC’s dedicated market surveillance team, supported by advanced and validated systems, closely monitors trading activity in Hong Kong and stands ready to take firm action against any manipulative or fraudulent conduct that undermines market integrity and stability.