Stablecoin issuance licenses in Hong Kong are very scarce, mostly registered by large financial institutions and leading Internet companies from China, with a projected extremely low number to be issued.

While more than 40 enterprises are preparing applications, smaller companies find it difficult to compete; meanwhile, although stablecoins have the potential to improve cross-border payments, they cannot replace existing national monetary systems.

MAIN CONTENT

  • The stablecoin license in Hong Kong is limited to a low number.

  • Most applications belong to financial institutions and large Chinese enterprises.

  • Stablecoins improve payments but cannot replace fiat currency.

How are stablecoin issuance licenses granted in Hong Kong?

To ensure strict management, Hong Kong only grants a limited number of stablecoin issuance licenses. According to information from China Business News on July 8, the number of licenses may be in single digits, creating fierce competition among candidates.

Currently, approved issuers such as JD.com, Standard Chartered, and Yuanbi have officially announced. However, more than 40 other companies are in the preparation or legal consultation phase to file applications, mainly large reputable organizations from China - this reflects a strong interest and investment in the stablecoin market.

Who are the stablecoin license applicants in Hong Kong?

Information from law firms indicates that dozens of stablecoin registration applications mainly belong to large financial institutions and leading Internet companies from China. Smaller and emerging companies have nearly no chance of competing in the context of high legal requirements and investment resources.

The special attention of large corporations shows that stablecoins are becoming a strategic target in the development plan of digital financial services in the Asia-Pacific region, as well as expanding influence into the global market.

"Only a few stablecoin licenses have been issued in Hong Kong, making it a very difficult choice in the face-off among large organizations."
Mr. Li Ming, Director of the International Financial Law Firm, 2024

Can stablecoins change the global monetary system?

Vice President of the Shanghai Development Research Foundation, Mr. Qiao Yidu, assessed that the expectation for stablecoins to enhance international payment efficiency may not reach overly high levels, with actual costs nearly 1%, not as low as advertised.

Stablecoins still rely on the fiat currencies of the country, which is an extension of the official monetary function, hence cannot overturn or replace the current international monetary system. Although many large organizations are competing to participate, the view that stablecoins will radically change the global financial structure is considered an overestimation of their actual role.

"Stablecoins cannot replace fiat currency; they are supplementary products that support payments but cannot disrupt the current structure."
Mr. Qiao Yidu, Vice President of the Shanghai Development Research Foundation, 2024

Challenges of stablecoin license competition in Hong Kong

The choice of granting stablecoin issuance licenses is creating intense competition among financial and technology corporations. Smaller entities find it difficult to meet the strict technical, legal, and financial standards to persuade regulators.

Strict requirements for risk management, security, and compliance with AML/KYC make the licensing process long and complex. Therefore, only large enterprises with strong legal and financial potential can successfully compete.

Current status and prospects for the application of stablecoins in cross-border payments

Stablecoins are expected to enhance the speed and reduce the cost of international money transfers. However, recent studies show that actual costs still hover around 1%, which differs significantly from the initial advertising.

Moreover, the stability and management capabilities of stablecoins depend heavily on the regulations of the cash issuing countries, making widespread adoption still face limitations. Nevertheless, the market continues to witness strong growth and stablecoin products are increasingly refined in terms of technology and legality.

Comparison table of stablecoin licenses of large companies in Hong Kong

Company License Status Company Size Industry JD.com Granted Large, multinational E-commerce, Digital Finance Standard Chartered Granted Large, international Banking, Finance Yuanbi Granted Large, digital finance Cryptocurrency, Blockchain Small companies Preparing Small Software development, Start-up

Frequently Asked Questions

1. Why is the stablecoin license in Hong Kong limited? Hong Kong applies strict management standards to protect the financial market and users, thus the number of licenses is very limited. 2. Who are the license holders of stablecoins in Hong Kong? Most are large financial institutions and leading technology companies from China with strong legal and financial capabilities. 3. Can stablecoins replace national currencies? No, stablecoins are just supplementary tools for payments, based on fiat currencies and cannot replace the current system. 4. What are the costs of cross-border payments via stablecoins? The actual cost is about 1%, much higher than the advertised nearly no fees. 5. Do small businesses have a chance to obtain stablecoin licenses? Very difficult due to strict legal and financial requirements, with a priority given to large organizations.

Source: https://tintucbitcoin.com/stablecoin-nhieu-to-chuc-xin-phep-hong-kong/

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