Hong Kong stablecoin licensing and the Asian crypto race

The HKMA regulatory rollout

The HKMA expects to grant the first batch of stablecoin issuer licenses in early 2026. This regulatory regime, which began on August 1, 2025, requires any person issuing fiat-referenced stablecoins in Hong Kong to hold a license. The ability to issue non-USD stablecoins gives Hong Kong a way to challenge US dollar dominance in regional settlement markets. Licensees must maintain paid-up capital of at least HK$25 million and ensure reserve assets match the par value of all outstanding stablecoins. These issuers must also process valid redemption requests within one business day. Interested parties should have submitted their interest to the HKMA by 31 August 2025 to receive feedback on regulatory expectations. Applicants must also submit independent assessment reports regarding their compliance with regulatory requirements. Licensees must publish a whitepaper covering reserve asset management, issuance, and redemption mechanisms. They must also conduct smart contract audits for all code changes. The HKMA generally expects that senior management and key personnel will be based in Hong Kong. Each person holding the positions of chief executive, director, stablecoin manager and controller of a licensee must be fit and proper with relevant knowledge and experience. Licensees must maintain a business plan that is realistic, concrete and viable. The HKMA expects interested parties to contact the licensing team via email to discuss their background and business model.

Divergent paths in Asia

Singapore maintains 37 Major Payment Institution licenses for Digital Payment Token services. Hong Kong reached 47 active licensed virtual asset trading platforms in April 2026. The Henley Crypto Adoption Index 2024 scores Singapore 45.7 out of 60, while Hong Kong scores 42.1. I find the divergence in strategy between these two hubs clear. Singapore focuses on an institutional trust layer through the MAS, while Hong Kong builds a market for tokenized real-world assets.

Singaporean firms serving clients outside the country faced a June 30, 2025, deadline to either cease overseas operations or obtain a specific license. The MAS also requires Digital Payment Token service providers to safeguard customer assets under a statutory trust. This includes conducting daily reconciliation of customer assets and keeping proper books and records. The MAS also requires that the custody function remains operationally independent from other business units. The MAS also requires clear disclosures to customers regarding the risks involved in having their assets held by the DPT service provider. The MAS requires daily reconciliation of customer assets. Singapore’s Henley score for tax-friendliness is 10 out of 10, while Hong Kong scores 9.0. You should watch how the HKMA handles the competition between local and offshore issuers. Hong Kong scored 9.8 out of 60 in economic factors, which is higher than its score of 5.9 for the regulatory environment.

Industry pushback and costs

The HKSFPA also noted that the current Type 9 licensing allows asset managers to allocate up to 10% of fund assets to crypto without additional permits if they notify regulators. The proposed changes eliminate this threshold entirely and require full virtual asset management licenses even for minimal exposures. The HKSFPA claims the mandate to use SFC-licensed custodians blocks venture capital funds from investing in early-stage tokens held by offshore entities. I find this creates practical barriers for venture capital and private equity funds investing in early-stage tokens not supported by local custodians. The HKSFPA says the new rules mandate that virtual asset managers use only SFC-licensed custodians for client holdings. The HKSFPA also requested a six-to-12-month grace period for firms that submit applications before the commencement date to continue operations while their applications undergo review. The HKSFPA also warned that the new regime could force existing operators to suspend activities while license applications undergo review. The HKMA also warned market participants to exercise caution in public communications to avoid making claims that could be misinterpreted. Does the HKMA prioritize large institutions over smaller, innovative players?