By Evereth Woodruff 
On August 1, Hong Kong’s Stablecoin Ordinance officially came into force, marking the city as the first jurisdiction in Asia to roll out a comprehensive regulatory and licensing regime for stablecoins.
The Hong Kong Monetary Authority (HKMA) announced that it expects to issue the first batch of stablecoin licenses by early 2027 and has already begun vetting applicants and preparing operational frameworks.
This brisk yet deliberate rollout signals Hong Kong’s measured gamble in digital finance—a venture that aims to strike a balance between innovation and stability, all in the pursuit of a trust-based new financial order.
Purpose-built regulatory experiment
Unlike the US model—where markets often race ahead of regulators—Hong Kong has embedded risk controls into the system from the outset.
The framework mandates 100% fiat reserves, rigorous audits, a minimum capital requirement of HK$25 million (US$3.2 million), and smart contract security verification. This places it closer in spirit to Singapore’s Payment Services Act or the EU’s MiCA, albeit with a bolder vision: to serve as a clearinghouse hub for stablecoin-based settlement.
Currently, only applicants who meet stringent conditions are eligible to apply for a stablecoin license. Among the dozens of interested institutions, it is estimated that only three to four may ultimately be approved. It’s not hard to see why: to safeguard both stability and safety, this is a game reserved for giants.
Eddie Yue, chief executive of the Hong Kong Monetary Authority, previously emphasized that “Stablecoins are not investment or speculative tools. Rather, they are one form of payment application built on blockchain technology, with no inherent potential for capital gain.”
Stablecoins and crypto: From power couple to conscious uncoupling
Originally, stablecoins were the indispensable partner of the crypto universe.
They smoothed out volatility, allowing exchanges and DeFi protocols to function with some semblance of price stability. But the relationship is changing. As regulators step in and financial sovereignty takes center stage, stablecoins are being reimagined as standalone instruments.
Their role is shifting from crypto sidekick to fiat-aligned financial tool, increasingly integrated into regulated monetary systems and cross-border settlements. Examples like HKDG (a Hong Kong dollar-pegged stablecoin) and CNHC (an offshore RMB stablecoin) underscore this evolution where policy intent meets financial engineering.
The logic is simple: Only when stablecoins operate under sovereign oversight and serve real-world economic use cases can they break free from their crypto origins and emerge as a legitimate new form of money.
Where the battle will be fought: use cases, not code
Today, US dollar stablecoins command over 90% of global market share—not because of superior tech, but because of their entrenched role in global trade, on-chain finance and price benchmarks. If the Hong Kong dollar or offshore RMB hopes to gain ground, it won’t be through elegance of design but through strategic deployment:
- HKDG, for example, could integrate with Octopus (public transit), e-commerce checkout systems, ticketing refunds and B2B reconciliation.
- Offshore RMB stablecoins could power Belt and Road trade flows, energy payments or remittances across Southeast Asia.
- Real World Asset (RWA) platforms could pair with HKD/RMB stablecoins for custodial services and liquidity pools.
Notably, JD.com’s fintech arm, JD Technology, has registered two stablecoin brands in Hong Kong—JCOIN and JOYCOIN—signalling a clear move by Chinese corporates to anchor themselves in both the HKD and RMB stablecoin space.
Global strategy: the on-chain battlefield
As of August 2025, the global crypto market cap has surpassed $4 trillion—roughly equivalent to the GDP of Japan—with Bitcoin accounting for over 60% of that value, according to CoinGecko, SlickCharts and the Financial Times. It is a fast-moving, liquidity-rich, high-frequency ecosystem.
If HKD and RMB stablecoins can successfully enter this realm, they will no longer be viewed as mere fiat wrappers, but rather as full-fledged players in on-chain finance. Asia’s time zone advantage, combined with Hong Kong’s RWA issuance platforms and compliant Web3 exchanges, could enable the city to carve out a liquidity node distinct from the US dollar’s dominance.
In July 2025, Shanghai’s State-owned Assets Supervision and Administration Commission began researching stablecoin and digital currency policies. Major tech firms like JD and Ant Group are already lobbying Beijing to explore offshore RMB stablecoin models—evidence of growing regulatory curiosity.
Hong Kong, in this light, could become both laboratory and launchpad.
A dual role for Hong Kong: architect and clearing hub
US dollar stablecoins enjoy global reach thanks to America’s financial hegemony, but cracks are showing—from regulatory fragmentation to reserve opacity. Hong Kong is betting on a different model: a sovereign-backed, rules-based, market-driven digital currency system.
The goal is to sidestep the centralization of central bank digital currencies (CBDCs) while avoiding the opacity of something like Tether. If successful, Hong Kong could evolve into the world’s stablecoin registrar, digital asset issuer and a politically neutral hub for cross-border payments.
Until recently, banks treated anything blockchain-related like radioactive waste. But under this new regulatory regime, the stablecoin ecosystem can’t scale without traditional banking’s buy-in.
Hong Kong must mobilize its domestic banks—enabling account openings, clearing participation, custody services and lending facilities—to embed the stablecoin architecture into legacy finance.
The bridge, not the destination
Today, stablecoins stand at the intersection of national regulation and Web3 innovation. They are neither fully state-controlled like CBDCs nor fully decentralized like cryptocurrencies. Instead, they operate as a kind of institutional middleware—policy-guided, tech-enabled and commercially implemented.
Looking ahead, as e-HKD and e-CNY roll out with features like smart contracts, cross-chain interoperability and programmable taxation, they may well inherit the crypto world’s most useful traits. We may soon witness the birth of the first generation of sovereign-approved, on-chain-native currencies.
In that sense, stablecoins are not the endgame; they are the transitional scaffolding. As sovereign nations embrace fully digitized fiat regimes, stablecoins may be rendered obsolete by e-HKD, e-CNY or even a digitized US dollar.
But right now, they are the bridge. Whether that bridge holds—and whether it leads anywhere worth going—depends on how well Hong Kong can turn its regulatory ambition into operational reality.
Jeffrey Sze is chairman of Habsburg Asia (partially owned by the Habsburg family) and General Partner of both Archduke United LPF and Asia Empower LPF. He specializes in high-end art transactions and RWA-T operations. In 2017, he secured a cryptocurrency exchange license in Switzerland.