Article Introduction
Hong Kong's new stablecoin regulations, effective August 2025, center around real-name Know Your Customer (KYC) requirements and licensing thresholds, triggering a restructuring of the industry: giants are accelerating their entry, small and medium-sized players are under pressure, and DeFi is temporarily excluded.
While the cryptocurrency world continues to debate the ideal of decentralization, Hong Kong has provided a practical answer with the Stablecoin Ordinance.
In the new regulations, effective August 1, 2025, real-name Know Your Customer (KYC) requirements act like a precise scalpel, not only demarcating compliance and non-compliance, but also propelling the industry from a chaotic period of unchecked growth to a new landscape dominated by giants.
This regulatory experiment, known as the "world's strictest," is essentially a redistribution of control over stablecoins. From a lack of rules to a licensed moat, this approach aligns deeply with Hong Kong's risk-defense instincts as an international financial center. HKMA Chief Executive Eddie Yue's observations more directly reveal the screening process: of the dozens of institutions contacted, many plans remained "only at the conceptual stage." Even those claiming to have application scenarios often lacked the technical expertise and risk management capabilities to issue stablecoins. This means that a license is not only a credential of compliance but also a dual endorsement of "technical maturity and application-ready capabilities." The entry of giants and the squeeze on small and medium-sized players: In the first week of the new regulations' implementation, market differentiation has already emerged, and the rumors and speculation surrounding license applications have added further uncertainty. The capital threshold screens out "players" The HK$25 million paid-in capital acts like an invisible gate, blocking most small and medium-sized entrepreneurs. Currently, those that have explicitly stated their intention to advance applications are mostly giants such as JD.com, Standard Chartered Bank, and Ant Group.
However, the industry consensus is becoming clearer:
the first batch of licenses may be tilted towards Hong Kong's local financial institutions.A Hong Kong Web3 practitioner revealed that the first batch of licensed companies may only be 2-3, and Ant and JD.com "are highly unlikely to appear on the first list." Behind this prediction lies the regulator's concern about the manageability of the pilot program's scale. If tech giants rapidly enter the market and expand their operations, the emergence of technical vulnerabilities or credit crises could trigger systemic risks. Small-scale pilot programs, on the other hand, are more consistent with a cautious approach of "crossing the river by feeling the stones." Meanwhile, mainstream stablecoins like USDT and USDC are temporarily exempted because they aren't issued in Hong Kong. However, industry insiders generally believe that if they offer services to local users in the future, they will eventually be subject to regulation. Under this landscape, Hong Kong's stablecoin market is rapidly shifting towards a "monopoly" among giants. Startups are either transforming into technology service providers (such as Sifang Jingchuang, which developed a cross-border clearing system for HSBC and Standard Chartered) or retreating to regions with lower compliance requirements. The once flourishing innovation ecosystem is being squeezed into a small pool of players by capital barriers. A "dimensionality reduction attack" on user experience. For ordinary users, the decline in convenience is palpable. The smooth "open a wallet and use it" experience of the past is now a thing of the past. Every transfer requires identity verification of both parties, and the transaction process has shifted from "instant on-chain" to "pre-compliance review." One Hong Kong dollar stablecoin user complained: "Cross-border payment times have gone from seconds to hours, like going back to the days of bank wire transfers." This degradation of experience is particularly devastating for scenarios that rely on efficient circulation. Notably, market enthusiasm is showing signs of cooling. Since late July, the Hong Kong Monetary Authority has prohibited virtual currency exchanges from holding public events related to stablecoins. Mainland regulators have also tightened regulations, prohibiting brokerages from conducting stablecoin and RWA-related activities and writing research reports. The "Compliance Silo" Dilemma of DeFi The very foundation of decentralized finance rests on anonymity and permissionless access. However, the new regulations explicitly exclude DeFi protocols, prioritizing only closed-loop scenarios like JD.com's settlement system, where users already have their real names, for approval. This means that Hong Kong's stablecoins may initially exhibit "Web 2.5" characteristics—appearing to operate on a blockchain, yet effectively confined to the control of centralized institutions. Legislative Council member Wu Jiezhuang's view is quite representative: "At this stage, security is more important than speed of innovation." However, the price of this "security" is the temporary separation of the DeFi ecosystem from the Hong Kong market. Who will obtain the first batch of licenses? The HKMA's screening criteria are clear: technological maturity, the integrity of the compliance system, and clear application scenarios—especially "real application scenarios" have been repeatedly emphasized by regulators. Based on this, local financial institutions such as Standard Chartered Bank and Bank of China (Hong Kong) are more likely to be selected. The Standard Chartered consortium integrates traditional finance and Web3 resources, and its Hong Kong dollar stablecoin, HKDG, has passed sandbox testing. As a representative of state-owned capital, Bank of China (Hong Kong) has a natural foundation of trust, drawing on its experience in digital Hong Kong dollar pilots and its advantageous clearing network. Ant and JD.com, while possessing ample technological expertise (Ant's blockchain expertise and JD.com's supply chain expertise), may remain on the short-term "waitlist" due to regulatory concerns stemming from their scale. A common trait among these potential winners is that they view stablecoins as "compliance tools" rather than "disruptive weapons," which may be precisely the "industry model" that Hong Kong's new regulations are seeking to identify. When the KYC dust settles, the reconstruction of Hong Kong's stablecoin market has just begunThis is not the end, but another key trial and error in the integration of cryptocurrencies into the mainstream financial system. Its experiences and lessons will eventually be written into the rulebook of global digital finance.
Anais
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