As Hong Kong's Stablecoin Ordinance prepares to take effect on August 1, the stablecoin market is entering a new era of compliance. This regulatory framework not only provides clear industry guidance for investors but also positions issuers, licensed virtual asset trading platforms (VATPs), and technology service providers as potential beneficiaries in the ecosystem.
The Dawn of Asia's Digital Asset Era
Hong Kong's stablecoin regulations mark a transformative phase for Asia's digital asset landscape. Investors must identify licensed entities with strong market presence and technological capabilities to capitalize on this financial innovation wave.
Market Overview: A $230 Billion Global Opportunity
- Current valuation: Stablecoin market capitalization exceeds $230 billion globally (J.P. Morgan & Guosen Securities, 2025).
- Key players: Issuers, VATPs (e.g., OSL), custodian banks (e.g., ZA Bank), and tech providers (e.g., Futu, Sifang Jingchuang) form the core ecosystem.
👉 Discover how stablecoins are reshaping global finance
Four Critical Challenges for Hong Kong's Market
- Nascent Market Stage
Hong Kong's crypto/stablecoin trading volumes remain modest compared to the U.S. Investors should focus on long-term regulatory advantages and infrastructure growth. Fragmented Revenue Streams
- Issuers: Earn through reserve asset yields
- VATPs: Generate transaction fees
- Tech providers: Offer compliance and system support
- Regulation Dictates Winners
Entities securing HKMA-issued stablecoin licenses and existing VATP holders will dominate. Retail-focused platforms (e.g., Futu) hold an edge over traditional brokers. - Interest Payment Ban
Hong Kong prohibits interest payments to stablecoin holders, eliminating "hold-to-earn" models prevalent elsewhere.
Stablecoin Classification: Off-Chain Types Lead Hong Kong's Market
J.P. Morgan categorizes stablecoins into four types, with off-chain models (e.g., USDT, USDC) being Hong Kong's regulatory priority due to their fiat-backed stability:
| Type | Example | Risk Profile |
|---|---|---|
| Off-chain | USDT, USDC | Lowest |
| On-chain | Dai | Moderate |
| Commodity-backed | Tether Gold | Medium |
| Algorithmic | (Defunct UST) | Highest |
How Stablecoin Issuers Profit: The Circle Case Study
- Primary revenue: 99% from reserve asset interest (e.g., short-term U.S. Treasuries managed by BlackRock)
- Secondary source: Minimal transaction fees
This model hinges on large-scale, low-risk reserve investments—making licensing crucial for market entry.
👉 Explore stablecoin investment strategies
The License Race: Key Contenders and Beneficiaries
With the ordinance's 2025生效, competition intensifies among:
- First-movers: Standard Chartered (HKDG), JD CoinChain (JD-HKD), and RD Technologies (HKDR) in HKMA's sandbox
- Tech giants: Ant Group and Alibaba subsidiaries reportedly pursuing licenses
- Infrastructure partners: ZA Bank (custody), Sifang Jingchuang (blockchain security), and others
As of June 2024, Hong Kong’s SFC has issued 11 VATP licenses, with more applications pending from brokerages like Futu.
FAQ: Hong Kong Stablecoin Regulation
Q: When does the Stablecoin Ordinance take effect?
A: August 1, 2025.
Q: Can stablecoin holders earn interest in Hong Kong?
A: No—the HKMA explicitly prohibits interest payments.
Q: Which stablecoin type is most regulated?
A: Off-chain (fiat-backed) models like USDT and USDC.
Q: How many VATP licenses exist currently?
A: 11, as of mid-2024.
Q: Who benefits most from the new rules?
A: Licensed issuers and VATPs with retail user bases.
Q: What’s the global stablecoin market size?
A: Over $230 billion, per 2025 Q2 data.