Hong Kong’s Stablecoin Hub Ambitions Hang in Balance After Beijing’s Latest Crypto Warning - What’s Next?
Hong Kong's grand plan to become Asia's stablecoin capital just hit a regulatory speed bump—courtesy of Beijing.
The Warning Shot
Chinese authorities fired a fresh salvo across the crypto landscape, reminding everyone who's really in charge of financial policy. While Hong Kong enjoys its 'one country, two systems' autonomy, Beijing's stance on digital assets remains crystal clear: mainland bans stay, and cross-border financial stability is non-negotiable.
Hub Dreams Meet Political Realities
Hong Kong's financial regulators have been pushing an ambitious framework to license and oversee stablecoin issuers—a move designed to attract blockchain innovators and capital. But Beijing's latest pronouncement throws a bucket of cold water on the party, creating uncertainty for projects betting on the city's crypto-friendly pivot.
It's the classic finance dance: promise innovation, deliver regulation, and watch the bankers collect fees either way.
The market's now left guessing whether Hong Kong can truly decouple its crypto ambitions from mainland policy, or if this is just another chapter in the endless tug-of-war between financial innovation and political control.
Beijing’s Latest Warning Targets Stablecoins
Legal experts and analysts suggested that Beijing authorities have clouded Hong Kong’s ambitions to become a key regulated hub for stablecoins following the PBOC’s explicit crackdown on the sector last week.
As reported by Bitcoinist, the People’s Bank of China, alongside other top financial regulators, affirmed on Friday that stablecoins do not qualify as legal tender in the mainland, as they fail to meet regulatory requirements and pose a risk of being used for illegal activities.
“Virtual currency-related business activities constitute illegal financial activities. Stablecoins are a form of VIRTUAL currency, and currently cannot effectively meet requirements for customer identification and anti-money laundering, posing a risk of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers,” the PBOC stated.
According to the South China Morning Post (SCMP), the recent pronouncement sank previous hopes that Beijing might have softened its stance on cryptocurrencies amid the global regulatory shift toward the sector, led by the United States. Moreover, it could affect Hong Kong’s efforts to become a hub for the stablecoin sector, analysts recently stated.
In a blog post cited by SCMP, Liu Honglin, founder of Shanghai-based Mankun Law Firm, affirmed that “all the ambiguity, speculation and room for wishful thinking surrounding stablecoins over the past few years has vanished as of today.”
Similarly, Brian Tang, founding director of the Law, Innovation, Technology and Entrepreneurship Lab at the University of Hong Kong’s Faculty of Law, told the news media outlet that Beijing’s latest stance means that applicants for Hong Kong’s stablecoin licenses WOULD need to “‘carefully reconsider’ whether the use cases they had submitted to the HKMA ‘touch mainland China issuers and users.’”
Hong Kong Licenses Approval Risks Delay
The statement also adds to the challenges that Hong Kong’s stablecoin push faces, the report noted. Earlier this year, the Hong Kong Monetary Authority (HKMA) enacted the Stablecoins Ordinance, which directs any individual or entity seeking to issue a fiat-referenced stablecoin (FRS) in the jurisdiction, or any Hong Kong Dollar (HKD)-pegged token, to obtain a license from the financial regulator.
Following the rollout, multiple companies have applied for the license, with more than 30 applications filed, according to SCMP, including logistics technology firm Reitar Logtech and the overseas arm of Chinese mainland financial technology giant ANT Group.
E-commerce giant JD.com, through its fintech arm JD Coinlink, started testing HKD-pegged tokens under the regulator’s sandbox program earlier this year. In August, Wang Hua, CFO and Board Secretary of PetroChina, also disclosed that the company is closely monitoring the latest developments regarding the HKMA Stablecoins Ordinance.
It’s worth noting that Hong Kong’s regulatory agency previously affirmed that the first batch of stablecoin issuer licenses would be approved at the start of 2026. However, some industry players told the news media outlet that the PBOC’s recent declarations could delay HKMA’s timeline.
An HKMA spokesperson stated that the regulator is currently reviewing the application and aims to begin with a few permits. Nonetheless, the spokesperson added that even if Hong Kong proceeds with the original schedule, projects involving the yuan or mainland Chinese institutions could be delayed.
“I do not think we will see offshore yuan stablecoin projects [in Hong Kong] within the next one or two years … as that conflicts with the current tone,” he said. Meanwhile, Syed Musheer Ahmed, founder of FinStep Asia, concluded that institutions from the mainland “will have to wait” before issuing stablecoins in the city.
