HSBC and ICBC join race for limited stablecoin licences in Hong Kong
HSBC and ICBC have announced intentions to apply for licences to issue stablecoins in Hong Kong, entering a regulatory process that limits initial authorisations and imposes strict conditions. The framework aims to balance innovation with financial stability by applying backing, governance and operational requirements and a timetable that begins permit issuance by 2026.
Regulatory context in Hong Kong
Hong Kong’s monetary authority has established mandatory licences, backing requirements and governance rules for stablecoins, designed to reduce systemic risk and increase transparency. The regime sets clear limits on initial authorisations and a timetable to start granting permits by 2026, reflecting a selective approach to prevent opaque operations and excessive market concentration.
What HSBC and ICBC seek
HSBC is running trials of the e-HKD+ and on-chain settlement projects that explore public networks and layer-2 solutions, seeking to validate uses for payments, settlements and bank-backed tokenized assets. ICBC aims to leverage its scale to offer regulated digital payments and custodial services, a strategy that could accelerate the tokenization of commercial and financial assets across Asia if approved.
Requirements and competition
The new rules create entry barriers that favour issuers with strong financial capacity, controls and governance, turning the limited number of licences into a strategic race among major banks and large fintechs. Key conditions focus on reserve quality, redemption, anti-money-laundering controls and minimum capital, which together raise the operational threshold for applicants and encourage alliances between incumbents and technology firms.
- Full reserves in liquid assets: one-to-one backing with cash or high-quality instruments to preserve parity.
- Redemption guarantee: an obligation to allow holders to redeem tokens for fiat at face value.
- AML/KYC controls: robust procedures to prevent money laundering and illicit financing.
- Minimum capital and governance: solvency, transparency and audit requirements to ensure continuity.
Risks and implications for the ecosystem
Concentration of licences among large banks could reinforce institutional trust but also centralize on-chain infrastructure, creating tensions with decentralization and financial sovereignty principles. Regulated issuers may boost enterprise adoption and easier access to tokenized services in compliant markets, provided interoperability and competition are preserved.
The competition for a small number of stablecoin licences in Hong Kong places HSBC and ICBC in influential positions to shape the coexistence of traditional banking and tokenized solutions, and the final outcome will determine whether the city adopts a regulated model that balances stability and adoption or one that concentrates power and limits diversity in the regional crypto ecosystem.
