Core Insights - The People's Bank of China has raised concerns about the risks of stablecoins being used for illegal activities, prompting market speculation on the impact this may have on Hong Kong's stablecoin initiatives [1] - The Hong Kong Financial Secretary, Paul Chan, announced that as of the end of September, 36 applications for stablecoin licenses have been received from various sectors, with plans to issue some licenses early next year, prioritizing robust reserve management, price stability, and anti-money laundering measures [1] - The Hong Kong government aims to create a clear compliance pathway to protect investors and reduce ambiguities that could lead to trading conflicts, thereby addressing potential disputes [1] Regulatory Developments - The licensing framework for virtual asset trading and custody service providers is being developed in collaboration with the Hong Kong Securities and Futures Commission, with plans to submit the regulatory framework to the Legislative Council next year [1] - The regulatory framework will cover key aspects of the virtual asset industry, striving to balance risk management and innovation [1] - The Hong Kong government is meticulously crafting policies to align with Web 3.0 and digital asset standards, ensuring investor protection, regulatory clarity, and international alignment to foster an environment that promotes innovation without compromising stability [1] Stablecoin Regulations - The Hong Kong Stablecoin Ordinance came into effect in August this year, with the Hong Kong Monetary Authority stating in October that it would review application materials and approve them according to the Stablecoin Ordinance and related regulatory requirements [2] - The initial phase of the licensing process has high entry barriers, with only a limited number of licenses expected to be issued [2]

Core Viewpoint - The implementation of the Stablecoin Regulation in Hong Kong aims to establish a licensing system for fiat-backed stablecoin issuers, enhancing the regulatory framework for virtual asset activities to maintain financial stability while promoting financial innovation [1][2]. Group 1: Licensing and Regulatory Requirements - Any entity issuing fiat-backed stablecoins in Hong Kong or claiming to anchor their value to the Hong Kong dollar must apply for a license from the Financial Management Commissioner [1]. - Licensed entities must adhere to regulations regarding reserve asset management and redemption, including proper segregation of client assets and maintaining a robust stabilization mechanism [1]. - There are also requirements for anti-money laundering, counter-terrorism financing, risk management, disclosure, and auditing [1]. Group 2: Consumer Protection and Advertising Regulations - The licensing system is designed to provide better protection for the public and investors, allowing only designated licensed institutions to sell fiat-backed stablecoins in Hong Kong [1]. - Only stablecoins issued by licensed issuers can be sold to retail investors, and advertising related to licensed fiat-backed stablecoin issuance is the only type permitted [1]. - Citizens are advised to remain cautious when receiving advertisements or information related to fiat-backed stablecoins [1].

Group 1 - The virtual asset market is rapidly developing, with Hong Kong accelerating its efforts to establish itself as an international virtual asset center, attracting Chinese brokerage firms to enter the market [1] - The Hong Kong government views Web3.0 and virtual assets as core strategies to reshape financial competitiveness, having released the "Virtual Asset Policy Declaration" in 2023 to support industry innovation [1] - The Hong Kong Securities and Futures Commission (SFC) has tightened regulations, implementing a "dual license" system for virtual asset trading platforms, with 11 institutions already obtaining formal licenses [1] Group 2 - Hong Kong is exploring the issuance of an official stablecoin, the "Digital Hong Kong Dollar," aimed at providing an anchor asset for the virtual economy and enhancing cross-border payment capabilities [2] - Companies listed in Hong Kong are accelerating their layout in the Web3.0 sector, covering various areas such as trading platforms, data analysis, and asset tokenization [2] - OSL Group, as Hong Kong's first licensed virtual asset trading platform, reported a 79% year-on-year revenue increase to HKD 375 million in 2024, with a trading volume exceeding HKD 100 billion [2] Group 3 - Other Hong Kong-listed companies, such as Boyaa Interactive, Victory Securities, and Blueport Interactive, have also made moves in the cryptocurrency space, with stock price increases of 97%, 176%, and 60% respectively this year [3]

Group 1 - As of the end of April this year, ten virtual asset trading platforms have obtained licenses in Hong Kong, with the Securities and Futures Commission actively processing other license applications to ensure compliance with regulatory requirements [1] - The Hong Kong government submitted the "Stablecoin Bill" to the Legislative Council at the end of last year to establish a regulatory framework for fiat-backed stablecoin issuers, with a second reading scheduled for May 21 [1] - If the bill is passed, the government plans to implement the regulatory framework within this year, including preparing regulatory guidelines and educational materials [1] Group 2 - The Hong Kong Securities and Futures Commission is focusing on investor education while ensuring investor protection, collaborating with the Investor and Financial Education Council to enhance public awareness of virtual asset products and services [2] - As of April this year, online seminars have recorded approximately 880,000 views, indicating a significant demand for education on virtual assets [2] - An animated short film aimed at primary and secondary school students was launched in March to explain the basics of virtual assets and encourage good financial attitudes, achieving 2.1 million views during its promotional period [2]