2 1 Shi Ji Jing Ji Bao Dao·2025-08-01 05:12Core Viewpoint - The Hong Kong Stablecoin Regulation officially took effect on August 1, with the first batch of licenses expected to be issued in early 2026, but the number of licenses will be limited to single digits, indicating a high barrier to entry for applicants [1][9][10]. Licensing Process - The Hong Kong Monetary Authority (HKMA) has not issued any licenses yet, and the planned issuance timeline is later than previously expected [1]. - The HKMA has emphasized a "high threshold" and a limited number of initial licenses, which has been interpreted by the market as an "invitation-only" approach [1][4]. - Despite the "invitation-only" interpretation, HKMA officials clarified that any interested institutions can proactively communicate with the HKMA regarding licensing matters [4]. Transition Period - A six-month transition period has been established for existing stablecoin issuers to comply with the new regulations, running from August 1, 2025, to January 31, 2026 [6]. - Existing issuers have two options: actively apply for a formal license or enter a winding-up period [6]. - If an existing issuer fails to apply successfully within three months after the regulation takes effect, they must orderly cease operations within four months [6]. Temporary Licenses - The Financial Management Commissioner will grant "temporary licenses" to qualified existing issuers during the first six months, allowing them to continue their issuance activities [7]. - Entities receiving temporary licenses will be treated as licensed until the temporary license expires or a final decision is made [7]. Market Dynamics - The initial licensing phase is expected to be slow, with the HKMA indicating that the timeline for issuing licenses may change based on the completeness of applications and maturity of use cases [10]. - Some institutions have received regulatory guidance to reduce stablecoin issuance, aligning with the HKMA's recent stance on cooling the market [10]. Potential Applicants - The three major note-issuing banks in Hong Kong—Bank of China (Hong Kong), Standard Chartered Bank (Hong Kong), and HSBC—are likely to be among the first to apply and receive approval [12]. - Other potential applicants include Chinese-funded banks, sandbox testing companies, large state-owned enterprises, and internet giants with payment licenses [12]. - Securities firms are expected to play a supporting role in stablecoin trading, custody, financing, and consulting services, with 44 institutions upgrading their virtual asset trading licenses as of now [12].