“It came as a surprise that only two licences were issued, and both to traditional banks,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International. “The market had expected the authority to issue at least three licences for stablecoin issuers from a broader range of backgrounds.”
Unlike highly volatile cryptocurrencies such as bitcoin and Ethereum, stablecoins are typically pegged to fiat currencies or other reference assets, with the aim of combining the efficiency of digital assets with the stability of traditional money.
Hong Kong is among the first jurisdictions to introduce a comprehensive regulatory framework for stablecoin issuance. Its Stablecoin Ordinance – one of the world’s earliest such laws – came into effect in August last year, reinforcing the city’s ambitions to become a global digital asset hub.