Hong Kong Advances Stablecoin Licensing Amid China's Crypto Restrictions

Hong Kong's central bank, the Hong Kong Monetary Authority (HKMA), is set to issue its first batch of stablecoin licenses in March 2026, despite ongoing opposition from Beijing regarding cryptocurrency activities. Eddie Yue, Chief Executive of the HKMA, announced that the authority is reviewing 36 applications from potential stablecoin issuers. This initiative follows the enactment of the Stablecoins Ordinance in May 2025, which mandates licensing for entities issuing stablecoins linked to the Hong Kong Dollar. The law took effect in August 2025, allowing the HKMA to begin accepting applications shortly thereafter.

CNBC

Stablecoins, which are cryptocurrencies pegged to stable assets like fiat currencies, are seen as crucial to the crypto ecosystem, accounting for over half of blockchain transaction values, according to Jordan Wain, policy advisory lead from Chainalysis. Potential use cases for stablecoins in Hong Kong include cross-border payments and tokenized deposit systems for international banks.

CNBC

China has maintained a conservative approach to cryptocurrency since implementing strict regulations beginning in 2013, culminating in a complete ban on crypto transactions in 2021. This ban was motivated by concerns over financial volatility, illicit activities, and the potential erosion of state control over monetary systems. Monique Taylor, an academic from the University of Helsinki, noted that stablecoins pose a challenge to China's monetary governance by allowing financial instruments to circulate beyond its regulatory reach.

CNBC

Beijing's apprehensions also extend to the dominance of the U.S. dollar in the digital asset economy, particularly regarding fiat-backed stablecoins like USDT and USDC. U.S. Treasury Secretary Scott Bessent expressed concerns that Hong Kong's move into digital assets could be perceived as an effort to challenge American financial leadership.

CNBC

Hong Kong's stablecoin licensing initiative is viewed as a limited experiment that allows the region to demonstrate effective supervision of stablecoins while aligning with its broader ambitions in Web3 and digital finance. This regulatory clarity could attract overseas investors interested in Hong Kong's stablecoin plans, although experts caution that the city is unlikely to foster a fully liberalized crypto environment.

CNBC

Critics argue that Hong Kong's licensing regime may not signify a shift in China's overall stance on cryptocurrencies. Taylor emphasized that there is little evidence to suggest that China intends to reverse its ban on crypto activities. Furthermore, on February 10, 2026, eight state regulators in China reaffirmed the country's ban on unauthorized crypto activities, including the issuance of yuan-backed stablecoins.

CNBC

• “We hope that by March we will be able to make a decision,” — Eddie Yue, Chief Executive, Hong Kong Monetary Authority

CNBC

• “Stablecoins challenge [Beijing's] state control over money, payments and capital flows, and therefore sit uneasily with China's state-centered model of monetary governance, which prioritizes oversight and domestic financial stability,” — Monique Taylor, Academic, University of Helsinki

CNBC

• “There is little evidence that China is moving to reverse its ban on cryptocurrencies,” — Monique Taylor, Academic, University of Helsinki

CNBC

Hong Kong's stablecoin licensing initiative represents a complex interplay between regional autonomy and Beijing's stringent regulatory framework, highlighting the ongoing tensions in the global cryptocurrency landscape.

CNBC