Hong Kong Set to Issue First Stablecoin Licenses in March

Tech

Hong Kong Set to Issue First Stablecoin Licenses in March

• Hong Kong to grant first fiat-backed stablecoin licenses next month.
• SFC expands framework to cover dealers, custodians, and margin products.
• HKMA advances EnsembleTX and aligns tax rules with OECD standards.

Hong Kong will issue its first stablecoin issuer licenses next month, marking a major step in its digital asset regulation. Financial Secretary Paul Chan confirmed the approvals during his 2026-27 budget speech.

The licenses will cover fiat-backed stablecoins and aim to ensure compliant, risk-controlled operations. This move signals Hong Kongs growing commitment to fostering a regulated and innovative crypto ecosystem.

Besides licensing stablecoin issuers, Chan outlined plans to expand the citys digital asset framework. New legislation later this year will introduce licensing regimes for crypto asset dealers and custodians.

This expansion will go beyond exchanges and stablecoins, covering over-the-counter trading and other professional crypto activities. Consequently, Hong Kong aims to strengthen investor protections while enabling diverse business models in the digital asset space.

Focus on Liquidity and Market Innovation

Liquidity is emerging as a priority for Hong Kong regulators. Chan highlighted efforts to improve market depth and support a wider range of products for professional investors. The Securities and Futures Commission (SFC) plans to allow crypto margin financing and derivatives, aiming to enhance market efficiency.

Moreover, the SFC will launch an accelerator to speed up innovative projects while maintaining compliance standards. These steps are designed to build confidence and attract more institutional participation in the crypto market.

Additionally, the government is supporting the tokenization of traditional financial instruments. Guidance will clarify that registers of debenture holders can be maintained on blockchains, and electronic signatures may be permitted for tokenized bond issuance. These initiatives aim to modernize financial infrastructure and encourage broader adoption of digital finance technologies.

CBDC Development and Regulatory Alignment

The Hong Kong Monetary Authority (HKMA) continues to develop its EnsembleTX platform, a wholesale central bank digital currency pilot launched in 2025. The platform enables 24/7 settlement of tokenized deposits and strengthens cross-border interoperability.

Furthermore, the government plans to amend the Inland Revenue Ordinance over the next two years. These changes will align Hong Kong with global tax transparency standards, including the OECDs Crypto Asset Reporting Framework and updated Common Reporting Standards.

Overall, Hong Kong is taking a structured approach to digital assets. By issuing stablecoin licenses, expanding dealer regulations, and supporting tokenization, the city is fostering a secure, innovative, and globally compliant crypto market.