Hong Kong Treasury Department: Expects Hong Kong regulated stablecoin to be launched as early as mid-year this year.

On June 10, Hong Kong Financial Secretary Paul Chan Mo-po replied to lawmakers' questions at a Legislative Council meeting, stating that the "Stablecoin Regulations" (Chapter 656) were implemented in August last year to introduce a licensing regime for stablecoin issuers anchoring to the legal tender in Hong Kong. Subsequently, the Hong Kong Monetary Authority received a total of 36 applications from institutions during the initial application period. The Monetary Authority of Hong Kong thoroughly reviewed the applications based on specific provisions listed in the "Stablecoin Regulations" and granted stablecoin issuer licenses to two institutions in April this year. Based on the current business plans of these two licensed issuers, the Hong Kong Treasury Department expects regulated stablecoins in Hong Kong to be launched by mid-year. Chan indicated that the two licensed stablecoin issuers must complete technology platform and system testing, implement risk management measures (including asset reserve management and asset security, price stability mechanisms, redemption arrangements, and technology security) before officially commencing business. The Monetary Authority of Hong Kong has maintained close communication with licensed issuers to ensure that all preparatory work is implemented as planned. The Monetary Authority of Hong Kong has proactively contacted other applicants for further communication and exchanges. While assessing these applications against the minimum criteria set out in the "Stablecoin Regulations," the Monetary Authority of Hong Kong will apply consistent and rigorous standards, primarily considering whether applicants can propose feasible and industry-developing application scenarios, sustainable business operations (including their risk management capabilities and experience), and compliance with laws and regulations in Hong Kong and other relevant regions. Furthermore, with regard to future licensing directions and timing, the Hong Kong Monetary Authority has not expressed a clear preference at this stage, pending various considerations such as applicant compliance with licensing requirements, market demand for stablecoins, practical applications, international regulatory trends, and operational and market responses following the issuance of licenses. The Treasury Department reiterated that considering the risks involved in issuing business, user protection, market capacity, and long-term development, the licensing requirements set a high threshold, and even if more licenses are issued in the future, the overall number of licenses will remain limited. In June last year, the Hong Kong government issued the "Hong Kong Digital Asset Development Policy Declaration 2.0," outlining the vision of building a reliable and innovative digital asset ecosystem with a focus on risk management and investor protection while striving to bring substantive benefits to the real economy and financial markets. The key focuses of "Policy Declaration 2.0" include broadening the types of tokenized products and promoting application scenarios and cross-border cooperation, including exploring stablecoins as payment tools. Chan mentioned that under the policy guidelines of "Policy Declaration 2.0" and the implementation of the "Stablecoin Regulations," the Hong Kong government and financial regulatory agencies are further promoting the development and interaction of stablecoins, digital currencies, and tokenized assets. The application scenarios of the two licensed issuers include facilitating real-time trading of on-chain tokenized assets using compliant stablecoins, helping to explore opportunities in the tokenized asset market and improve market liquidity. In addition to issuing stablecoins, the two licensed entities are involved in the Hong Kong Monetary Authority's projects on central bank digital currencies and tokenized deposits, collaborating with local telecommunications, payment, and digital asset companies. Therefore, in exploring the potential of different new payment tools and the interconnection between these payment tools and tokenized assets, they can complement each other and achieve greater synergy. The Monetary Authority will continue to communicate closely with licensed issuers to ensure that they implement relevant application scenarios as planned and further explore the application of compliant stablecoins in the digital finance field, creating value for the real economy and financial activities. Additionally, with the support of the Securities and Futures Commission of Hong Kong and the financial and technology industries, the Hong Kong Monetary Authority has established the Ensemble project architecture working group and is actively working together to implement local standards to support the interoperability between central bank digital currencies, tokenized currencies, and tokenized assets, promote the seamless flow of currencies and assets within the tokenized ecosystem, and provide the industry with clearer development directions. Building on the results of the Ensemble project sandbox experiment, the Hong Kong Monetary Authority launched EnsembleTX in November last year, allowing tokenized deposits and digital assets to be traded in a controlled trial environment, initially focusing on promoting the use of tokenized deposits in the tokenized currency market fund trading to manage liquidity and funding needs in real-time. At the same time, the Securities and Futures Commission of Hong Kong continues to implement the ASPIRe roadmap, including developing detailed and operational regulatory guidance to promote the application of asset and financial product tokenization under clear regulations and controllable risks, and to promote the integration of traditional finance with Web3. Looking ahead, Chan stated that the Hong Kong government and financial regulatory agencies will continue to adhere to the principles of "same business, same risks, same rules," establish a clear and risk-based regulatory framework, promote the healthy, responsible, and sustainable innovation and development of the Hong Kong digital asset ecosystem, and further consolidate Hong Kong's position as an international financial center.