Yu Wei Wen: The development of Hong Kong ' s compliance and stability eco-circle

On 10 April, the Hong Kong Monetary Authority announced that, under the Stabilisation Currency Ordinance, it had officially issued stabilization currency licences to the tributaries (Standard Chartered Bank, Hong Kong Telecommunications, Aide Group Joint Venture) and HSBC Bank。The President of the Hong Kong Financial Authority, Yu Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Wei Hong Kong, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank, Hong Kong Bank Bank, Hong Kong Bank, Hong KongTHIS DEAL MARKS THE BEGINNING OF A NEW PHASE IN THE REGULATION OF HONG KONG'S STABLE CURRENCY. IN THE FIRST PHASE OF THE SCHEME, BOTH HOLDERS ISSUED HONG KONG DOLLAR STABILIZATION COINS, FOCUSING ON FOUR MAJOR SCENARIOS: CROSS-BORDER AND LOCAL PAYMENTS, CURRENCYIZATION ASSET TRADING, AND INNOVATIVE APPLICATIONS. SINCE BOTH INSTITUTIONS HAD A BANKING BACKGROUND AND HAD BEEN INVOLVED IN THE CBDC EXPERIMENT, IT WOULD BE USEFUL TO EXPLORE SYNERGIES BETWEEN “FUTURE PAYMENTS”. THE AUTHORITY STRESSED THAT THE THRESHOLD FOR THE ISSUANCE OF CARDS WAS MAINTAINED AT A HIGH LEVEL AND THAT THE NUMBER OF LICENCES WOULD REMAIN LIMITED IN THE FUTURE. FOLLOW-UP WILL ENSURE THE COMPLIANCE OF HOLDERS, INCLUDING THROUGH ON-SITE REVIEWS. THIS IS INTENDED TO PROVIDE A SOUND FOUNDATION FOR HONG KONG AS A DIGITAL FINANCE HUB, IN THE LIGHT OF INTERNATIONAL REGULATORY TRENDS, TO EFFECTIVELY ADDRESS REAL ECONOMIC DISTRESS THROUGH THE USE OF A COMPLIANCE-STABILIZED CURRENCY。

Author: Yu Weiwen

Source: Hong Kong Financial Authority

As at 30 September 2025, the deadline for the first phase of applications had been closed, the Authority had received 36 applications. Over the past six months, the supervisory team of the Authority has been working overtime to examine each application in a comprehensive and in-depth manner, in accordance with the specific provisions set out in the regulations, and to communicate with applicants as required, to clarify questions, to request information and to ensure that the process is rigorous and fair。

The Authority has consistently emphasized that there is a fairly high threshold for the issuance of cards, with two main considerations in mind when approving: (1) the applicant has sufficient risk management competence and experience and complies with relevant regulations in Hong Kong and elsewhere; and (2) the applicant is able to present a concrete application scenario and a viable operational and development plan. In 36 applications, the Bank demonstrated its ability to manage risks in a sound manner, on the basis of compliance with the relevant statutory licensing requirements, and presented precise applications and future development plans, which resulted in the issuance of licences。

Both issuers plan to issue Hong Kong dollar stabilization in the first phase, and in combination their business plans, applications and development paths include:

1. Cross-border payments:(c) To use the advantages of a stable currency to provide efficient, transparent and lower-cost cross-border payments to enterprises and individuals, taking advantage of the large network of international operations and partners of the issuers themselves, subject to regulations and requirements established by regulatory authorities in other regions

2. Local payments:(a) Take advantage of the existing business infrastructure and customer base to accelerate the application of stable currency in Hong Kong to provide safe, fast and efficient trading and settlement experiences for individuals and businesses

3. Currencyized asset transactions:As a clearing-house tool for transactions involving tokenized assets, compliance stabilization currency can facilitate real-time transactions along the chain, help exploit opportunities in the market for tokenized assets and increase market liquidity; and explore the application of compliance stabilization currency as collateral management

4. Innovative applications:Fully exploit the programmable nature of stable currencies and explore innovative applications such as the promotion of conditional payments and supply chain financing。

BOTH ISSUERS HAVE A BANKING BACKGROUND AND ARE INVOLVED IN PILOT PROJECTS SUCH AS THE CENTRAL BANK DIGITAL CURRENCY (CBDC) AND DECORATE DEPOSITS. THEY HAVE A MORE IN-DEPTH UNDERSTANDING OF THE FUNCTIONS AND APPLICATIONS OF VARIOUS DIGITAL CURRENCIES, WHICH IS CONDUCIVE TO EXPLORING THE POSSIBILITIES OF “FUTURE PAYMENTS”, ONE OF WHICH COMBINES A DISTRIBUTOR WITH A LOCAL TELECOMMUNICATIONS, PAYMENT, DIGITAL ASSET ENTERPRISE, SO THAT COMPLIANCE STABILIZERS CAN ACT AS A SYNERGY. THE TWO AGENCIES PLAN TO GRADUALLY INTRODUCE MORE DIFFERENT FIRMS (E.G. SCENARIO) TO WORK TOGETHER TO PROMOTE THE APPLICATION OF THE COMPLIANCE AND STABILIZATION CURRENCY, AND TO CONTINUE TO EXPAND THE USE OF THE STABILIZATION CURRENCY, OPEN UP MORE OVERSEAS MARKETS AND CONSIDER INTRODUCING OTHER CURRENCIES IN RESPONSE TO BUSINESS AND MARKET CONDITIONS AND INTERNATIONAL REGULATORY DEVELOPMENTS。

Holders are required to implement sound policy and risk management measures in the areas of reserve asset management and asset security, price stabilization mechanisms, foreclosure arrangements, and scientific and technical security, in accordance with regulatory requirements, and to establish a robust anti-money-laundering system, including the detection and follow-up of suspicious transactions through block chain monitoring tools in their day-to-day operations, as well as the verification of the identity of the holders of stable currencies, either on their own or through reliable third-party partners, to ensure the effectiveness of such measures. In their applications, two issuers demonstrated their ability to comply with and implement these measures。

The issuer will have to complete the preparatory work before officially launching his compliance stabilization currencyThese include scientific platforms and systems testing, windpipe implementation, human resource arrangements, etc. According to the current business plans of the two agenciesWe expect Hong Kong's regulated stabilization currency to be rolled out from mid- to the second half of this year。

Following the formal introduction of a stable currency, the Authority will maintain effective controls to ensure that issuers comply with the relevant regulatory requirements, based on the nature of the individual holder ' s business and risk, through such measures as on-site review, off-site review, independent evaluation and meetings with the holder ' s management. We will also look at the effectiveness of implementation and the preparation of expansion operations, in accordance with the business plan presented at the time of its application, to ensure that Hong Kong ' s policy objective of issuing stabilization currency plates is reflected。

In the case of institutions that did not issue licences in the first applications, or other institutions that would apply in the future, the Authority will communicate and communicate with them and examine them in accordance with the relevant legal and uniform regulatory standards and requirements. We are open and cautious with regard to future licensing and timing, and there is no clear trend at this stage. But we must reiterate that, given the risks involved in issuing operations, the security of users and the carrying capacity and long-term development of the market, there is a considerable threshold for issuing cards, and even if they are to be reissued in the future, the overall number of licences will be limited. The effectiveness of the operation of the two plates after landing and the reaction of the market also help us to make a more comprehensive assessment。

Looking to the future, regulations for currency stabilization are being developed in many parts of the globe, and major international financial organizations, such as the Financial Stability Council and local regulators, are actively studying and discussing aspects of currency stabilization and risk management, including regulatory models for large and multinational issuers, and it is expected that global regulatory paths will become clearer. We will actively participate in these discussions and provide Hong Kong ' s implementation experience and, in the light of international regulatory trends and practical experience, review from time to time the design of Hong Kong ' s regulatory system to ensure that a solid foundation is laid for Hong Kong ' s digital finance hub, providing an innovative and robust path to stable currency regulation。