Chinese-funded institutions retreat from Hong Kong stablecoins

Original｜Tencent News "Periscope" by Xie Zhaoqing

After more than a year of stablecoin sandbox testing and multiple setbacks, Hong Kong's first batch of stablecoin licenses has finally been issued.

On the afternoon of April 10, the Hong Kong Monetary Authority announced the first batch of companies that have obtained stablecoin licenses. Unlike previous market speculation about companies with Chinese backgrounds such as Ant Group and Guotai Junan International, the list of the first batch includes only two companies: Hongkong and Shanghai Banking Corporation and Anchor Financial Technology Limited.

Among them, the shareholders of Anchor Financial Technology Limited are Standard Chartered Bank (Hong Kong), Animoca Brands, and HKT (Hong Kong Telecommunications) under Li Ka-shing. Unlike HSBC's application entity, Anchor Financial Technology Limited is actually a joint venture of the three aforementioned companies, with its management team independent of the three shareholder companies.

This joint venture is one of the three participants that will enter the Monetary Authority's stablecoin "sandbox" testing in July 2024, along with JD Coin Chain and Yuan Coin Technology.

If USDT (a dollar-pegged stablecoin) is the "Wild West" of the digital world, then the stablecoin licenses issued by Hong Kong this time have built the first reinforced concrete wall supported by regulatory rules and the legal financial system for this wilderness.

This is indeed "one of the few good news" for people in the crypto space during the bear market. Several leaders from the crypto and traditional fund sectors told Tencent News "Periscope" that the crypto space, without a narrative, is "as quiet as dead water," and stablecoins are the most important narrative for the future of the crypto space, as well as a milestone event in Hong Kong's financial sector.

Chen Weimin, Vice President of the Monetary Authority, stated on-site that compared to other jurisdictions, Hong Kong has always been at the forefront of the stablecoin business, including launching the stablecoin sandbox test, the "Stablecoin Ordinance," and officially issuing licenses. He believes that the issuance of stablecoin licenses is indeed a very important step for the Hong Kong market.

According to the plan, these two licensed entities are expected to officially issue stablecoins in the second half of this year, but they must complete system testing and implement risk management measures beforehand.

Chen Weimin emphasized multiple times that the timeline for issuing the second batch of licenses has not yet been determined, as it needs to be based on the operational status of the first two companies, and the total number of licenses in the future will be very limited.

Tencent News "Periscope" learned that the Chinese institutions that participated in the application submission had received "window guidance" from relevant departments, requesting them to postpone their participation in this stablecoin license application. Nevertheless, some Chinese institutions have continued to communicate with the Hong Kong Monetary Authority over the past few months.

A person involved in the license application stated that after excluding Chinese institutions, the vast majority of the proposed applicants have relatively limited strength, and there are not many qualified institutions that can fully meet the requirements of the "Stablecoin Ordinance." However, what surprised the outside world is that the Hong Kong Monetary Authority ultimately chose only HSBC and Standard Chartered's two entities.

The Regulatory Screening Process Resembles "Unboxing": Risk Management Capability and Application Scenarios are Core Considerations

When discussing how to select the first two approved companies from the 36 officially applied institutions, Chen Weimin briefly responded to Tencent News "Periscope," saying, "Although 36 have submitted applications, only these two meet the requirements of the Monetary Authority."

How were the first two companies selected? Chen Weimin simply replied, "The Monetary Authority team went through very complicated work to filter out only two that met the requirements." When asked why Yuan Coin, which was already in the sandbox, did not meet the conditions, Chen Weimin refused to comment on the grounds of "not disclosing information about other companies," emphasizing that "being in the sandbox does not guarantee obtaining a license, and companies not in the sandbox do not mean they cannot obtain a license."

A financial circle insider in Hong Kong told Tencent News "Periscope" that compared to the previous issuance of digital bank licenses in Hong Kong, which selected some non-bank institutions like ZhongAn, this time no non-bank institutions were chosen for stablecoins, indicating that "Hong Kong regulators may be more conservative now."

A management member from a crypto company directly told Tencent News "Periscope" that excluding the inability to issue licenses to Chinese entities, even Yuan Coin (a local Hong Kong company in the sandbox) did not obtain a license, which may also reflect the current Hong Kong regulators' distrust of innovation from small and medium-sized financial technology enterprises, preferring to choose banks for innovative activities.

"It seems that this selection process resembles unboxing. From the results, it appears that regulators are more concerned about the banking background, ultimately selecting these two." A crypto insider analyzed to Tencent News "Periscope," but more of the selection rules are indeed not understandable to the outside world.

The President of the Monetary Authority, Yu Weiman, stated that when approving licenses, the Monetary Authority mainly considers two aspects: whether the applicant has sufficient risk management capabilities and experience, and complies with relevant laws and regulations in Hong Kong and other regions; whether the applicant can propose specific application scenarios and feasible business plans and development plans.

Currently, the application scenarios of these two companies are quite generic. RD Technologies under Standard Chartered and HSBC announced on the same day that they are currently only issuing stablecoins pegged to the Hong Kong dollar, with more choices for local application scenarios in Hong Kong.

Compared to the US dollar and RMB, the funding pool and user base of the Hong Kong dollar stablecoin are significantly smaller. In a competitive landscape where dollar-pegged stablecoins occupy nearly 70% of the market share, these two licensed institutions have not yet provided a clear incentive plan to encourage users to switch to using Hong Kong dollar stablecoins.

This is also one of the important reasons why the issuance of stablecoin licenses in Hong Kong has not sparked a strong reaction in the crypto space. Chen Weimin stated on-site that if the two licensed institutions plan to issue new types of stablecoins, they need to communicate separately with the Monetary Authority, such as US dollar stablecoins or RMB stablecoins.

The future business plans of these two licensees include cross-border payments, tokenized asset trading, conditional payments, supply chain financing, and other innovative applications—however, neither has provided a specific timeline for the implementation of related businesses.

HSBC's application scenarios include its Payme quick payment service and HSBC APP payment scenarios, with Payme having over 3.3 million users, including 160,000 merchants—more like adding a stablecoin wallet to HSBC's mobile payments. HSBC management revealed on-site that users under HSBC's mobile accounts will have a stablecoin account in addition to their existing accounts—this stablecoin account needs to be activated after the user applies.

HSBC's Payme supervisor, Li Guankang, told Tencent News "Periscope" that any Payme user can open a stablecoin account, where users can directly transfer to friends and family, transfer to merchants, or invest in products linked to stablecoins, etc. However, he also mentioned that users in the HSBC APP cannot directly open accounts—only after HSBC selects qualified stablecoin users can they apply for a stablecoin account.

This is because Payme account opening requires users to be local residents of Hong Kong, while users of the HSBC APP include mainland users. Under the current management framework in Hong Kong, only local residents can participate in virtual asset transactions—mainland customers, even if they are HSBC mobile payment users in Hong Kong, cannot apply for stablecoin accounts.

Tencent News "Periscope" learned that HSBC has not yet confirmed its application for a stablecoin license in Hong Kong until September 2025. Insiders indicated that at that time, HSBC was still concerned about the risks associated with stablecoins. The application deadline set by the Monetary Authority was September 30, 2025—specific details about when HSBC submitted its application are unknown. However, the Monetary Authority had previously stated that submissions could be delayed beyond September 30.

Li Guankang told Tencent News "Periscope" that HSBC has previously participated in central bank digital currency and tokenized deposit products, and has been exploring new businesses. In fact, HSBC has been in communication with Hong Kong regulators regarding stablecoins. However, he did not disclose when HSBC specifically participated in the stablecoin license application.

The Path to Hong Kong Stablecoin Licenses Without Chinese Institutions: Underlying Power Struggles

The absence of Chinese institutions in the first batch of stablecoin licenses in Hong Kong is not surprising. The Hong Kong Monetary Authority had previously stated that it had received interest from 77 institutions wishing to submit applications, including sandbox participants, banks, and payment giants.

Tencent News "Periscope" learned that among these 77 proposed applicants were dozens of Chinese institutions. For example, several Chinese institutions, including Lianlian Pay and gaming company NetEase, rushed to submit application forms to the Monetary Authority before the application deadline of October 31, 2025.

As of the time of publication, attempts to contact Lianlian Pay, NetEase, and others for comments have not been successful.

Tencent News "Periscope" previously learned that the Monetary Authority and mainland regulators synchronized this list of 77 institutions. Insiders revealed to Tencent News "Periscope" that after November 2025, many Chinese institutions that had submitted applications gradually received notifications requesting them to refrain from participating in the Hong Kong stablecoin license application.

The aforementioned insiders indicated that all of this was expected. In August 2025, before the "Stablecoin Ordinance" officially took effect on August 1 of that year, a large number of Chinese institutions suddenly flooded into Hong Kong, hoping to apply for licenses.

At that time, the stablecoin license application had already entered the formal application process. After the Hong Kong government released the stablecoin application guidelines at the end of July 2025, according to the timeline of the Hong Kong Monetary Authority, institutions wishing to apply for licenses could officially connect with the Monetary Authority and other institutions after August 1, and submit application materials to the Monetary Authority by September 30 or earlier, with the final application deadline set for September 30.

The peak period for Chinese institutions flooding into Hong Kong's Central was around July and August 2025. Tencent News "Periscope" learned that by early July, more than 20 Chinese institutions had met with the head of the financial technology department responsible for stablecoins at the Hong Kong Monetary Authority.

At that time, He Hongzhe, the head of the Digital Finance Department of the Hong Kong Monetary Authority responsible for stablecoin license approvals and related businesses, was referred to by these institutions as the hardest person to schedule a meeting with. These institutions included but were not limited to Chinese financial institutions and state-owned enterprises in Hong Kong.

Tencent News "Periscope" previously learned that on August 6, 2025, Guo Guangchang, founder of Fosun Group, personally led key members of Fosun's stablecoin team and other executives to meet with Hong Kong Special Administrative Region Chief Executive John Lee and Financial Secretary Paul Chan on the same day. The Financial Secretary is the direct superior of the Monetary Authority, which is responsible for the approval of stablecoin licenses in Hong Kong.

Tencent News "Periscope" learned that during a meeting with Paul Chan, the latter suggested that industrial companies apply for stablecoin licenses preferably in conjunction with banking institutions, as the latter have business experience in payment and anti-money laundering. Different insiders revealed to Tencent News "Periscope" that Paul Chan made similar suggestions to many of the institutions he met.

Subsequently, the vast majority of companies intending to apply for stablecoin licenses began to flock to banks in Hong Kong, seeking cooperation to apply for stablecoin licenses. Collaborating with banks to jointly apply for stablecoin licenses became a standard action. This also forced some institutions in the sandbox to start seeking bank partnerships—based on the first batch of licenses granted by the Monetary Authority, both Anchor Financial Technology and Standard Chartered come from "big banks": as Paul Chan's suggestion indicated, there was a greater emphasis on "banking background."

The craze for stablecoins was also spreading in mainland China at that time. Tencent News "Periscope" learned that a first-tier city in mainland China once hoped to try stablecoin business in its free trade zone. However, this idea was quickly abandoned.

The turning point occurred on October 27, 2025. Pan Gongsheng, Governor of the People's Bank of China, delivered a keynote speech titled "The Construction Practice and Future Evolution of China's Macro-Prudential Management System" at the 2025 Financial Street Forum Annual Meeting, mentioning that "stablecoins, as a financial activity, currently cannot effectively meet basic requirements for customer identity verification, anti-money laundering, etc., amplifying global financial regulatory loopholes, such as money laundering, illegal cross-border fund transfers, terrorist financing, etc., and creating a strong atmosphere of market speculation, increasing the fragility of the global financial system." At the same time, he also mentioned that the People's Bank of China will continue to work with law enforcement agencies to crack down on domestic virtual currency operations and speculation, maintain economic and financial order, and closely monitor and dynamically assess the development of overseas stablecoins.

This statement directly cooled the enthusiasm of Chinese institutions in Hong Kong that were rushing to apply for stablecoin licenses, and there was even a period when many Chinese institutions hesitated to submit application forms before the September 30, 2025 deadline. Tencent News "Periscope" learned that some bolder institutions actually submitted applications and received routine inquiries and responses from the Hong Kong Monetary Authority in the following months.

By early December, most Chinese institutions had basically halted the process of applying for stablecoin licenses in Hong Kong. Public information shows that in early December 2025, the People's Bank of China led a meeting to coordinate efforts to combat virtual currency trading and speculation, with 13 national regulatory departments including the Ministry of Public Security, the Central Cyberspace Affairs Commission, and the Central Financial Office in attendance, officially including stablecoins under the regulation of virtual currencies.

This meeting clarified that stablecoins fall under the category of virtual currencies, and their related business activities are included in the illegal financial activity regulatory framework. Stablecoins cannot meet compliance requirements for customer identity verification, anti-money laundering, etc., and there are risks of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers, necessitating strengthened regulation across the entire chain.

At that time, several leaders involved in the stablecoin license application in Hong Kong stated that this joint meeting sent a strong regulatory signal and was the most direct indication of "cooling" for stablecoins. Subsequently, Tencent News "Periscope" learned that even institutions that had formally submitted applications had postponed their applications for stablecoin licenses in Hong Kong.

However, these individuals remained optimistic. They believe that as a testing ground for early trials, although Chinese institutions are not on the first batch of license lists, these institutions will still be the main force in the future construction of the stablecoin ecosystem in Hong Kong, and there may even be opportunities to participate in stablecoin license applications in the future.