Chinese Regulators Tighten Grip on Mainland Banks and SOEs in Hong Kong’s Stablecoin Market

China is moving to impose strict restrictions on its state-owned enterprises (SOEs) and banks operating in Hong Kong, in a move that could significantly reshape the city’s budding stablecoin sector.

According to a report from Caixin, sources revealed that Chinese banks and other institutions applying for a Hong Kong stablecoin license may soon be required to exit their cryptocurrency ventures in the region.

For those seeking to obtain such licenses, the new rules could mean delaying or even abandoning their plans entirely.

Beijing’s Sudden Policy Shift

China’s regulatory about-face stems from growing fears that the country might be jumping onto the stablecoin trend too quickly, especially while the long-term direction of the market remains unclear.

“Hong Kong’s stablecoin business is just beginning, and its future direction is uncertain. It is important not to rush into participation.”

The decision has rattled observers who saw recent moves by Chinese giants such as China Merchants Bank and e-commerce powerhouse JD.com as signals that Beijing was beginning to open up to digital assets through Hong Kong.

Instead, the latest restrictions reaffirm Beijing’s cautious stance, reflecting its concerns over risk spillovers, the supervision of cross-border capital flows, and potential instability within the financial system.

In fact, this shift aligns with China’s longstanding skepticism toward crypto. In early August, authorities ordered domestic firms to halt the publication of research and seminars related to stablecoins, citing fears they could become tools for fraud and illicit activity.

Hong Kong Pushes Ahead With Crypto-Friendly Reforms

The developments in Beijing contrast with Hong Kong’s own attempts to expand its role as a global digital asset hub. A separate Caixin report noted that the Hong Kong Monetary Authority (HKMA) is considering easing certain capital requirements for banks.

Regulators reportedly intend to optimize crypto asset capital rules, allowing banks to handle compliant stablecoins and support investment in digital assets built on public, permissionless blockchains. The initiative underscores Hong Kong’s commitment to inclusivity and its ambition to strengthen its reputation as a global finance hub.

China’s Mixed Signals on Stablecoins

The potential withdrawal of Chinese SOEs and banks from Hong Kong’s stablecoin sector could reshape Asia’s competitive landscape. While Hong Kong regulators are eager to attract institutional players, they must balance innovation against Beijing’s risk-averse policies.

Still, China has not entirely closed the door on stablecoins. In late August, reports indicated that authorities had begun authorizing the use of yuan-backed stablecoins in select cases to promote international use of the renminbi.

Rumors also surfaced that the Shanghai State-owned Assets Supervision and Administration Commission had convened a meeting to discuss strategies for engaging with stablecoins and digital currencies, signaling a more nuanced approach.

China has also made global waves through private initiatives. In July, local blockchain firm Conflux launched a new stablecoin backed by offshore Chinese yuan.

Designed for circulation among “Belt and Road” countries, the token was explicitly barred from use within mainland China, highlighting the government’s dual-track strategy of international promotion while limiting domestic exposure.

As Hong Kong accelerates efforts to cement its position as a regional crypto hub, mainland China’s tightening restrictions highlight the geopolitical and regulatory complexities of linking its vast financial system with international Web3 markets.

For now, the divergence between Hong Kong’s openness and Beijing’s caution underscores the uncertain future of stablecoins in Asia’s most influential financial corridors.