Hong Kong Stablecoin Ordinance Takes Effect: Why Do Concept Stocks Fall Collectively?

2025/08/03 19:08

On the first day of the implementation of the Hong Kong Stablecoin Ordinance, the capital market, which had been turbulent for nearly two months, cooled down.

Wind data shows that on August 1st, A-share and Hong Kong-listed stablecoin stocks collectively fell. Among them, Hong Kong-listed Bright Smart Securities & Finance (1428.HK) fell nearly 20%, Yunfeng Financial (0376.HK) fell over 15%, OKEx (1499.HK), Lianlian Digital (2598.HK), Guotai Junan International (1788.HK), and OSL Group (0863.HK) fell over 10%; A-share Sifang Jingchuang fell over 5%.

Unlike when the Stablecoin Bill was passed by the Hong Kong Legislative Council on May 21st, the Hong Kong Monetary Authority (HKMA) did not release any information related to stablecoins on its official website on August 1st.

Previously on July 29, the Hong Kong Monetary Authority's official website released a document on the licensing system for stablecoin issuers.

At a technical briefing held on the same day, the Hong Kong Monetary Authority stated that it expects the first batch of Hong Kong stablecoin issuer licenses to be issued in early 2026. At the same time, the Hong Kong Monetary Authority emphasized its concerns about money laundering risks and made it clear that the identities of Hong Kong's compliant stablecoin holders must be verified in the initial stage, which means a certain degree of real-name system.

In addition, Hong Kong Monetary Authority officials have repeatedly emphasized in recent times that they expect only a single-digit number of licenses to be issued in the first batch.

"The regulatory standards are stricter than the market expected, the licensing time is later than the market expected, and the number of licenses issued is less than the market expected. It is natural that the share prices of stablecoin concept stocks will fall back." Zou Chuanwei, president of the Jiangsu Jinke Digital and Technology Finance Research Institute, told Caixin. "Overall, the market is reflecting expectations for the implementation of Hong Kong's stablecoin policy," Zheng Lei, Chief Economist of Samoyed Cloud Technology Group, told Caixin. The Hong Kong Monetary Authority's approach suggests it prioritizes security and stability in the initial licensing process, which may mean some anticipated institutions miss out on the first wave of licenses. Licensing Slower Than Expected Stablecoins are a special type of cryptocurrency that leverage blockchain technology advantages such as decentralization, peer-to-peer functionality, low cost, and high efficiency. Unlike cryptocurrencies like Bitcoin, stablecoins are typically pegged to a reference asset, such as fiat currency, to maintain relative stability and serve as a medium for cryptoasset transactions. In recent years, thanks to their stable value, high efficiency, and low cost, stablecoins have gradually penetrated traditional financial sectors such as cross-border payments. Their application prospects have also garnered significant attention from major global economies such as the United States, the European Union, and Hong Kong. The Stablecoin Ordinance will officially come into effect on August 1, 2025, marking the official establishment of a licensing regime for stablecoin issuers in Hong Kong and legal status for compliant stablecoins. Prior to this, there had been widespread anticipation for progress in the licensing of stablecoin issuers in Hong Kong. On June 15, Hong Kong Financial Secretary Paul Chan Mo-po stated that after the Ordinance comes into effect, the Hong Kong Monetary Authority (HKMA) will expedite the processing of license applications received to enable qualified applicants to commence their operations. On July 7, Hong Kong's Secretary for Financial Services and the Treasury, Christopher Hui, stated in a newspaper interview that the goal is to issue licenses within the year. On July 29, the HKMA's official website published a document on the licensing regime for stablecoin issuers. The press release stated that prospective applicants are encouraged to contact the regulator on or before August 31 to understand its expectations and receive appropriate feedback. Licensing will be an ongoing process, and institutions that are fully prepared and wish to be considered early should submit their applications on or before September 30. Zheshang Securities later stated in a statement, "This can be understood as communication of intent in August, with the first batch of license applicants expected to begin in September." Hong Kong Monetary Authority Deputy Chief Executive Chen Weimin stated that institutions applying for licenses need to submit a large amount of documents, which is a heavy workload, and regulators must devote equal attention to reviewing all the materials. The first batch of stablecoin licenses are expected to be issued in early 2026. "The overall pace of progress is slightly slower than we expected, reflecting the (Hong Kong) Monetary Authority's prudent and steady regulatory attitude. We expect the first batch of stablecoin issuer licenses to be issued early next year," CITIC Securities stated in a statement. In this regard, Yue Weiwen mentioned in an article published on July 23rd: "Stricter regulatory requirements will inevitably limit the potential for significant expansion of the stablecoin business in the short term, and this industry reaction is to be expected. After all, the regulated stablecoin business is in its early stages. A strict approach, followed by a moderate relaxation based on practical experience, is clearly more conducive to the continued healthy development of the market and issuers than a loose approach at the outset and then cleaning up any irregularities." At the aforementioned technical briefing, the Hong Kong Monetary Authority (HKMA) placed particular emphasis on anti-money laundering regulatory requirements. Hong Kong Monetary Authority Executive Director (Regulation and Anti-Money Laundering) Chan King-hong stated that the requirement to verify the identity of every compliant stablecoin holder in Hong Kong is more stringent than that outlined in the regulator's previous consultation document on anti-money laundering regulatory guidelines. Currently, the HKMA's "Guideline on Combating Money Laundering and Counter-Terrorist Financing (Applicable to Licensed Stablecoin Issuers)" outlines anti-money laundering regulatory requirements, including risk assessment, customer due diligence, ongoing monitoring, stablecoin transfers, and suspicious transaction reporting. It's worth noting that in June of this year, the Bank for International Settlements (BIS), known as the "central bank of central banks," released a special chapter of its annual economic report ahead of schedule, issuing a strong warning against stablecoins. The BIS believes that stablecoins still fail to meet the requirements to become a pillar of the monetary system across three key tests: single-origin, resilience, and integrity. In particular, they suffer from significant flaws in integrity, primarily manifested by the fact that "stablecoins have become a preferred method for illicit exploitation to circumvent integrity safeguards," which primarily points to the challenges they pose to anti-money laundering. Concept Stocks Pull Back Since the "Stablecoin Bill" was passed by the Hong Kong Legislative Council on May 21st, the concept of stablecoins has continued to heat up in the capital market. "Some listed companies, regardless of whether their core business is related to stablecoins or digital assets, have become 'gold-making' simply by announcing their intention to develop stablecoin business. Their stock prices have risen, trading volume has surged, and their company profiles have been significantly enhanced." In an article published on July 23rd, Eddie Yue stated that the hype surrounding stablecoins has led to excessive market excitement. On July 3rd, Hong Kong-listed Duodian Digital Intelligence (2586.HK) announced it was preparing to apply for a stablecoin license in Hong Kong, China. Its stock price surged over 20% that day, reaching nearly 90% intraday. Public information indicates that Duodian Digital Intelligence was founded by Zhang Wenzhong, founder of Wumart Supermarket, and its primary business is providing digital solutions to retail supermarkets. A-share investors are also enthusiastic about stablecoins. On the morning of July 29th, rumors circulated that Hang Seng Electronics and Ant Financial were collaborating on a stablecoin, sending Hang Seng Electronics (600570.SH)'s stock price hitting its daily limit. According to media reports, Hang Seng Electronics responded the same day, stating that it was aware of the rumors and that the company's daily limit increase might be related to them, but that the official announcement regarding the collaboration would be final. The following day, an analyst at Huafu Securities claimed to have forwarded the information, but this was later confirmed to be false. Virtual asset trading related to stablecoins has also been popular. On June 25th, Guotai Junan International announced that it had been approved to upgrade its securities trading license, allowing it to provide a full range of virtual asset trading services. The company's stock price soared nearly 200% that day. As of August 1st, Guotai Junan International's share price was HK$5.71 per share, a nearly 380% increase from before the license upgrade. Wind data shows that since May 21st, the A-share stablecoin index has risen by over 25%. Some Hong Kong-listed stablecoin stocks have seen significant gains, including OKEx, which has risen by over 185%, Bright Smart Securities & Finance, which has risen by 86%, and Yunfeng Financial, which has risen by 55.9%. In response to the capital market's enthusiasm, Eddie Yue twice published articles to "cool down" the trend toward stablecoins. On June 23rd, Yu Weiwen published an article titled "The Stability and Sustainable Development of Stablecoins," stating, "As the implementer of the stablecoin regulatory system, we welcome public interest in stablecoins. However, as a regulator, I also want to cool down the atmosphere so that everyone can view stablecoins more objectively and calmly." A month later, Yu Weiwen published another article, stating, "The cooling-off efforts still need to be strengthened." He bluntly stated that the current discussion surrounding stablecoins is overly conceptual and has a tendency to become a bubble. "We have made it clear earlier that at best, only a few stablecoin licenses will be issued in the initial stage. In other words, there will be a lot of disappointment." Yu Weiwen further stated that even if a license is obtained, there will be some uncertainty about the contribution to a company's short-term profits. He urged investors to remain calm and think independently when digesting the "positive" market news. After the market closed on July 29th, the Hong Kong Monetary Authority announced that it did not expect to issue any licenses this year. "This is significantly different from the market's earlier predictions that stablecoins would rapidly advance starting in August," said Zheng Lei, adding that the capital market hype around stablecoins will cool down, at least until early next year. Since July 30th, stablecoin stocks have collectively retreated. Wind data shows that stocks like Yaocai Securities Finance, Lianlian Digital, and Yunfeng Financial have seen cumulative declines of over 20% over the past three trading days. Who will seize the initiative? Despite the slower-than-expected pace of licensing, the market remains highly focused on the list of licensed stablecoin issuers in Hong Kong as the Stablecoin Ordinance officially takes effect. CITIC Securities released a research report recommending continued focus on two key areas: issuers likely to receive the first batch of scarce licenses, and scenario platforms with a certain degree of involvement in the creation of stablecoin use cases. With the changing pace of licensing, who will be among the first to receive the licenses? In a previous article, Eddie Yue outlined some of the licensing requirements for stablecoin issuers, including the requirement that licensed stablecoin issuers have tangible application scenarios, sufficient supporting infrastructure, key capabilities, and experience across diverse sectors, as well as capabilities in technological security, risk management, and anti-money laundering. Applicants must demonstrate a concrete and feasible business plan and sufficient technical and financial resources to support operations. "The Hong Kong Monetary Authority has already announced its requirements for licensed institutions," said Zou Chuanwei. "First, there must be a stablecoin use case; second, there must be blockchain technology expertise to meet regulatory compliance requirements, including anti-money laundering requirements." Regarding the application scenarios, Zou Chuanwei believes that currently, over 90% of USD stablecoin trading volume comes from cryptoasset transactions. Hong Kong may prioritize the application of the Hong Kong dollar stablecoin in real economy scenarios such as cross-border trade settlement. According to Eddie Yue, as of July 23rd, dozens of institutions had proactively contacted the HKMA team, some of whom had explicitly expressed interest in applying for stablecoin licenses. Public information indicates that institutions currently interested in applying for stablecoin licenses in Hong Kong include payment institutions, internet companies, and commercial banks. Among those interested in applying for stablecoin licenses, JD.com, Standard Chartered Bank, and Yuanbi Technology, which are in the Hong Kong Monetary Authority's Stablecoin Issuer Sandbox, as well as Bank of China (Hong Kong) and Ant Group, which are not in the sandbox, are hotly discussed as the first wave of candidates to receive licenses. On June 12, Ant Group's Ant International and Ant Digits divisions announced their intention to apply for stablecoin issuer licenses in Hong Kong. Industry insiders analyze that Ant Group's simultaneous application for two licenses is expected to increase its chances of success. A long-time stablecoin expert told Caixin that Ant Group has strong capabilities in cross-border payments, RWA, and other scenarios, as well as a solid foundation in blockchain technology and anti-money laundering, making it highly likely to be among the first wave of licenses. On June 17, JD.com Chairman Richard Liu expressed his hope to apply for stablecoin licenses in all major currency countries and regions worldwide. As of June 19th, JD.com's stablecoin has entered the second phase of sandbox testing. Testing scenarios primarily include cross-border payments, investment transactions, and retail payments. Mobile and PC applications will be available for retail and institutional users in the future. According to media reports, Yuanbi Technology CEO Liu Yu recently expressed interest in issuing the Hong Kong dollar stablecoin (HKDR) on the Ethereum blockchain in an interview. Several industry insiders told Caixin that JD.com and Yuanbi Technology have already entered the stablecoin issuer sandbox and are more familiar with the relevant mechanisms and processes, giving them a greater chance of being among the first to receive a license. On July 31st, Standard Chartered Bank's CEO for Hong Kong and Greater China and North Asia, Huen Wai-yee, stated that the company is studying the Hong Kong Monetary Authority's latest regulatory documents on stablecoins and aims to submit an application as soon as the Stablecoin Ordinance comes into effect. Among the aforementioned institutions in the race to obtain a license, Bank of China (Hong Kong) has not yet disclosed any relevant information. Several industry insiders told Caixin that Bank of China (Hong Kong) will also apply for a stablecoin license in Hong Kong. Caijing asked BOCHK for confirmation on whether it would apply for a stablecoin issuer license and its subsequent layout plans in the stablecoin field. BOCHK replied, "There is nothing to reply to at this time." BOCHK and Standard Chartered Bank are both note-issuing banks in Hong Kong, and the latter has even entered the Hong Kong Stablecoin Issuer Sandbox. Both are considered likely to be among the first batch of licenses. However, as the pace of licensing by the Hong Kong Monetary Authority changes, market expectations have also changed. Zheng Lei believes that the Hong Kong Monetary Authority's attitude shows that it regards safety and stability as more important considerations in the early stages of licensing, which may mean that some popular institutions expected by the market will miss out on the first batch of licenses.

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