The Hong Kong Monetary Authority (HKMA) granted two stablecoin licenses last month as the city is set to test whether fiat-backed digital tokens can meaningfully lower banking costs while simultaneously ensuring robust risk management under a new regulatory framework.
HSBC and Anchorpoint Financial – a Hong Kong-based joint venture that includes Standard Chartered Bank (SC), Hong Kong Telecom, and Animoca Brands – were each approved to issue Hong Kong dollar stablecoins in a move blockchain advocates say would address real world pain points across supply chains and reduce settlement times between merchants and their customers.
The licenses extend Hong Kong’s digital economy ambitions within the Greater Bay Area (GBA) framework even as decentralised cryptocurrencies remain banned in mainland China. When the stablecoin ordinance passed back in August, initial expectations of a higher number of applications exceeded the final 36 filing with the HKMA, a drop experts attribute to tougher oversight requirements.
[See more: Hong Kong to test real-world stablecoin applications as inaugural licenses near release]
“Fewer applicants should be seen as a sign of strength, not weakness,” shares Paul Tang, chief operating officer at Payment Asia, speaking to The Bay (Macao News). “Given Beijing’s ongoing crypto ban overlapping local regulatory concerns regarding anti-money laundering (AML) and know your customer (KYC) factors, Hong Kong’s bank-like oversight is what transforms stablecoins from speculative instruments into payments you can trust for commerce,” Tang explains.
From the end-user’s perspective, the introduction of decentralised tokens should appear no different than any other digital transaction nor should they feel the complexity of the change. Backed by decades of institutional grade compliance infrastructure, the initial recipients of the new stablecoin licenses are already well-established note-issuing financial institutions, which analysts say minimises disruption when Hong Kong dollar-stablecoins are integrated into their incumbent payment franchises.
Measuring the financial and economic impact
For regulators, the paramount focus rests on whether stablecoins can actually lower cross-border transaction expenses and deliver faster payments. Fees associated with remittance payments have often been emblematic of the multi-layer banking complexity of sending money overseas, where the World Bank estimates that the cost of sending $200 can fetch as much as 6.5 percent, amounting to a day’s pay for some diaspora workers.
While economists argue that those savings would improve household purchasing power, they also represent lower fee income for the financial intermediaries involved. Even with their stablecoin license and any complementary businesses, banking analysts at JP Morgan do not expect either HSBC or SC to generate significant new revenues that will materially impact their bottom lines.
[See more: Hong Kong stablecoins deepen US dollar peg while opening a path for offshore RMB tokens]
Instead, initial pressure should emanate from the deposit side where tokenised accounts reallocate money from checking accounts, prompting higher funding costs should banks respond by raising interest rates. While analysts expect their Hong Kong deposit base to fund the initial wave of stablecoin conversions, both HSBC and SC can also capture on-chain settlement that might otherwise migrate to non-bank issuers, partially offsetting capital outflows while simultaneously addressing the AML and KYC challenges posed by regulatory.
What happens next
By bypassing layered fees, cost savings could surface immediately for certain cases, Tang says, adding that as adoption grows and infrastructure improves, those efficiencies will become even more compelling for everyday use. Beset by soft demand, identifying a scalable usability beyond trading cryptocurrency underlines stablecoin’s growth potential. Morgan Stanley estimates the combined turnover of prominent issuers Tether and Circle account for just 1.2 percent of global foreign exchange turnover and 1.1 percent of the US M1 money supply.
The stablecoin licenses given to HSBC and SC should not be viewed as a coincidence. “Each bank has demonstrated genuine capabilities in risk management,” Tang comments, adding that the strong oversight allows the HKMA to introduce these instruments within a familiar supervisor structure while leaving space for broader fintech and digital asset firms to participate down the road as the framework evolves.
While the two are pursuing contrasting go-to-market strategies, analysts see this approach reaching the entire market landscape. HSBC is adopting a peer‑to‑peer (P2P) and peer‑to‑merchant (P2M) model that will integrate to its HSBC HK Mobile Banking and PayMe App, which currently supports 3.3 million accounts. For the rival institution, SC’s business‑to‑business‑to‑consumer (B2B2C) approach distributes through authorised partners for institutional user cases like tokenised real-world asset settlement and cross-border capital flows, before eventually reaching retail users indirectly.
[See more: How Hong Kong’s digital aspirations are transforming Macao’s financial identity]
Valued at $320 billion, SC analysts are forecasting the stablecoin market to reach $2 trillion by 2028 while United States Secretary of the Treasury Scott Bessent projects the asset class could reach as high as $3.7 trillion by the end of the decade. With SC looking to release its Hong Kong dollar-backed stablecoins this quarter and HSBC targeting its version in the second half of this year, the first two regulated stablecoins are unlikely to compete head-on from day one, particularly as the use for stablecoins grows.
Instead, experts say that this goes beyond shortening settlement times brought on by the latest technology. “It is about integrating regulated digital assets for evolving business models and future proofing the payment ecosystem for the next generation of global commerce,” Tang notes.
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