Hong Kong tightens the stablecoin market

HashKey and OSL secured approval to serve retail investors in Hong Kong. This upgrade follows their previous licenses to provide digital asset trading services to professional investors. The Hong Kong Monetary Authority issued its first stablecoin licenses to HSBC and Anchorpoint Financial Limited after they demonstrated the ability to manage financial and operational risks. These licensees focus on practical applications such as cross-border payments and settlement for tokenized assets. I find the regulatory tightening in Hong Kong particularly stark. The Stablecoin Ordinance requires issuers to maintain HKD 25 million in paid-up capital and a Hong Kong-based senior management team. Licensed entities must also hold fully liquid, high-quality reserves and process customer redemption requests within one business day. Unlicensed activity carries penalties of up to HKD 5 million in fines and seven years of imprisonment, while continued non-compliance incurs a fine of HKD 100,000 per day. The Hong Kong Monetary Authority works with the Securities and Futures Commission to ensure there is no overlap between their respective regulatory regimes. Existing issuers can access a six-month transitional period if they apply within three months of the ordinance taking effect. Do these high entry barriers prevent smaller innovators from entering the market?

DeFi volatility and US yield restrictions

DeFi instability remains a major concern as Stream Finance suspended all deposits and withdrawals following a $93 million loss in fund assets. This loss caused the pegged stablecoin XUSD to plunge to $0.43 within a 24-hour window after traders rushed to exit. On November 3, aggressive swaps drove XUSD from $1 to $0.92 before liquidations pushed the price lower. I view the Stream Finance collapse as a clear failure of oversight for DeFi protocols. The US Office of the Comptroller of the Currency also published a final rule on October 21, 2026, regarding the GENIUS Act. This rule prohibits licensed issuers from paying interest or yield to holders solely because they hold, use, or store a payment stablecoin. The US regulator will evaluate all reward programs based on economic substance rather than simple labels like cashback or rewards. This regulation applies to issuers regardless of whether they are U.S. institutions or foreign entities subject to OCC jurisdiction. The US agency removed the rebuttable presumption to allow for fact-based supervision. The rule distinguishes a payment stablecoin from an investment product by ensuring the token is redeemable for a fixed monetary amount.

Singapore and Dubai enforce strict compliance

The Monetary Authority of Singapore requires any entity incorporated in Singapore that provides digital token services to overseas clients to obtain a Digital Token Service Provider license by the June 30, 2025 deadline, or face immediate cessation of operations. MAS refuses all requests for phased implementation or transitional arrangements to avoid financial crime. Violators face fines up to SGD 1 million and three years of imprisonment. You should expect these rules to tighten further. Dubai’s Virtual Asset Regulatory Authority also maintains tight control through its marketing regulations. All marketing activities in the territory require prior approval from VARA. If an entity fails to comply with marketing rules, VARA issues a cease and desist letter followed by fines of up to AED 200,000. Failure to comply with paid content requirements results in a fine of AED 150,000. Failure to maintain records for a minimum of two years results in a fine of AED 50,000. Unlicensed crypto services in Singapore can lead to fines of up to SGD 1 million and ten years of imprisonment, while daily fines for non-compliance reach SGD 100,000. The regulator enforces these rules via the Financial Services and Markets Act 2022, which empowers the authority to oversee digital token services provided from abroad to local users.