Hong Kong ushered in a new era of digital finance on Friday as its stablecoin ordinance took effect, putting cryptocurrency’s most-traded cash substitute under the same stringent oversight as banks and triggering a rush for a limited number of licences from the Hong Kong Monetary Authority (HKMA).
The HKMA said on Tuesday that only “a handful” of licences would be issued initially, to calm a hyped-up market. Since the beginning of this year, the share prices of some companies have soared simply after suggesting plans to develop stablecoin operations, as the prospects of crypto and digital asset adoption become more mainstream.
While the key benefits of stablecoins – digital tokens backed by fiat currencies or other reserve assets – such as cost savings, efficiency and transparency were established, the number of successful candidates could be limited due to the HKMA’s stringent criteria aimed at making the city a leading digital asset hub, according to analysts.
“The regime will filter out those unable to align with the strict regulations, produce viable use cases and demonstrate financial stability,” said Cora Ang, head of legal and compliance for Asia-Pacific at Amina Group, a Swiss financial services firm focused on virtual assets.
