Hong Kong Stablecoin "Fire Gun": From Licensing to Ecosystem, the Real Long Run Has Just Begun

External criticism of the idea that “Hong Kong stablecoins cannot rely on licenses alone” is not meant to be a pessimistic verdict; rather, it points to the real lesson that must be addressed in the next stage.

By Farmer Frank

On April 10, 2026, the Hong Kong Monetary Authority officially granted the first batch of stablecoin issuer licenses to Dingdian Financial Technology Limited and Hong Kong Shanghai HSBC Bank Limited. With this, Hong Kong has become one of the world’s first financial centers to complete the full institutional closed loop of “legislation—review—licensing,” which also means stablecoin regulation has officially moved from policy design into the licensed operating stage.

Amid the flood of news, many people have also noticed an intriguing signal: among the two entities that received the first batch of licenses, one is HSBC independently licensed, while the other—behind Dingdian Financial—is a joint venture backed by Standard Chartered Bank (Hong Kong), Hong Kong Telecom, and Animoca Brands.

In other words, among the first batch of entrants, HSBC and Standard Chartered are already two of Hong Kong’s three major note-issuing banks.

What does that mean?

1. From “note-issuing banks” to “stablecoin issuers”

To be fair, the first batch of licenses going to HSBC and Standard Chartered is not itself surprising, but the policy signals released behind this choice are well worth a close read.

This requires looking back at Hong Kong’s relatively unique currency issuance system. As is well known, Hong Kong’s current banknote system is mainly responsible for issuing paper currency by commercial banks; except for the 10 HKD notes issued directly by the Hong Kong government (HKMA), the 20, 50, 100, 500, and 1000 HKD notes are issued by three note-issuing banks: HSBC, Standard Chartered, and Bank of China Hong Kong.

In other words, on the issue of currency and financial infrastructure, Hong Kong has long accepted a very clear institutional arrangement: highly regulated commercial institutions take on the front-end issuance function, while regulators keep the stability of the system under control through rules, reserves, and prudential requirements.

Seen within this framework, giving the first stablecoin licenses primarily to HSBC and the joint venture led by Standard Chartered essentially continues the approach of “starting with the most trustworthy and robust counterparties,” consistent with Hong Kong’s own monetary tradition.

For a new category that has just entered an institutionalized stage, seeking stability, controllability, and “not making mistakes” in the first round of licensing is, in itself, a very normal path choice in financial regulation.

This point is actually not difficult to understand.

Although stablecoins wear the “virtual assets” label, once they enter an institutionalized stage, what regulators look at first has never been the story, but rather the most traditional—and most financial—questions: whether reserve assets are real, whether redemption mechanisms are clear, whether risk isolation is sufficient, whether fund flows are controllable, and whether anti-money-laundering and traceability mechanisms are reliable.

But following this logic, another question naturally arises: among the three major note-issuing banks, why is Bank of China Hong Kong absent?

This is obviously not just a simple matter of qualifications or capabilities. In fact, Bank of China Hong Kong was at one point widely viewed as an active participant in the first batch of applications during August–September 2025; until October 2025, when a further joint statement at the central level more clearly defined the policy boundaries. Stronger constraints were imposed on private stablecoins—especially the issuance of RMB-linked stablecoins. As a result, some planned participating China-based institutions (including Bank of China Hong Kong, Bank of Communications Hong Kong, CCB Asia, and major internet companies such as Ant and JD.com) also shelved their related plans.

Source: Fudan Research Institute

This also means that the first batch of licenses ultimately went to the two note-issuing banks—both reflecting Hong Kong’s institutional logic of seeking stability at the start, and serving as a realistic answer under the current cross-border policy environment. Whether Hong Kong stablecoins can go far ultimately depends on who can truly roll out this system in the next phase.

And this is precisely the part that many discussions are most likely to overlook.

2. Compliance matters a lot, but “licenses” ≠ “ecosystem”

When analyzing the prospects of Hong Kong stablecoins, one reference point that cannot be avoided is the development history of virtual banks in Hong Kong.

In 2019, the HKMA issued virtual bank licenses to 8 institutions. At that time, market expectations were high. Many believed that the new licensing framework would automatically generate a new competitive landscape and a new financial experience. By 2024, the HKMA released a review report, stating that the market’s overall response to the products and services offered by the eight virtual banks was ideal; at the same time, it also clearly stated that the number of virtual bank licenses was already appropriate and that no new licenses would be issued for now.

This is a very typical reference sample. Looking back, virtual banks certainly produced some results, but licenses did not automatically convert into market dominance, nor into sustainable business models. This also reveals a real-world issue: in a financial system that already has mature profit pools, mature customer relationships, and mature clearing channels, between institutional openness and getting the market fully “running,” there is often still a long road ahead.

Put plainly, licenses can solve the access problem, but they cannot solve issues such as user habits, scenario coverage, business efficiency, and network effects.

Stablecoins are the same, and the difficulty is only going to be higher.

After all, unlike virtual banks, stablecoins not only need to compete with the traditional financial system—they also have to take on “incumbent players” worldwide, such as USDT and USDC, which are already deeply embedded in exchange operations, on-chain protocols, and wallet ecosystems.

In the end, it is not that once you obtain a license you automatically have a market. Licenses only solve the question of whether you can be allowed—and trusted—to issue stablecoins. But they do not solve several other even harder things: Why would users use your stablecoin? Why would trading platforms, wallets, merchants, market makers, and corporate finance systems be willing to accept your stablecoin? Why would funds be willing to stay, circulate, and settle within your system, and ultimately form network effects?

In other words, issuance is a qualification at the supply side, while the ecosystem is the answer at the demand side.

If you look from the perspective of market competition, the real test begins only after the licensing moment, because the stablecoin competition chain includes at least five links:

Issuance solves “whether you have it”

Distribution solves “whether it reaches users”

Liquidity solves “whether it can enter and exit with low friction”

Scenarios solve “what else it can do besides just being held”

Operations solve “how to keep compliance, clearing, risk control, identity verification, and user experience stable and running long-term”

And among these five links, issuance is only the first.

That is why, when the outside world criticizes that “Hong Kong stablecoins cannot rely on licenses alone,” it should not be simply interpreted as pessimism. On the contrary, these criticisms point to the real lessons Hong Kong stablecoins must truly complete in the next stage—after licensing, if there is not enough strong distribution capability, liquidity organization capability, and scenario-anchoring capability, Hong Kong stablecoins are likely to remain correct at the institutional level, but difficult to achieve success at the commercial level.

Today’s global stablecoin market is no longer one where you can win users just by having a compliance label. User habits, scenario entry points, trading depth, clearing and settlement efficiency, wallet integration, fiat on/off-ramp capability, and developer interfaces are the key variables that determine whether a stablecoin truly comes to life.

From overseas market development paths, this shift in focus is already very clear.

After Stripe completed its acquisition of Bridge, it no longer treats stablecoins merely as a marginal payment capability, but instead further incorporates them into enterprise treasury management and global payment systems—for example, Stablecoin Financial Accounts launched in 2025 for enterprises in 101 countries; afterward, it also launched Open Issuance driven by Bridge. These initiatives are all attempts to upgrade stablecoins from a supportive alternative asset into a “payment capability that can be embedded in enterprise financial systems.”

Circle’s actions are similarly representative. Over the past period, Circle has continuously pushed USDC toward a more “programmatic payments” direction: on the one hand, it publicly promotes autonomous payments based on x402, enabling AI Agents to use USDC automatic payment APIs, compute power, data, and content; on the other hand, it is also working to make ultra-small, machine-to-machine payments into standardized capabilities.

This shows that, in the eyes of the most perceptive players in payment infrastructure, the focus of stablecoin competition has long moved beyond issuance rights themselves—it’s about who can turn stablecoins into financial infrastructure that enterprises can call, settle, and manage.

Hong Kong has had related practices as well. As early as just before last year’s Hong Kong “Stablecoin Ordinance” officially took effect, the licensed OSL group launched three comprehensive new products targeted at institutions: the compliant stablecoin management platform StableX, the asset tokenization service Tokenworks, and an enterprise-grade crypto payments solution OSL BizPay. In 2026, it also launched USDGO, an enterprise compliant US dollar stablecoin that meets U.S. federal regulatory requirements and can be distributed compliantly in Hong Kong, mainly targeting areas such as cross-border e-commerce, bulk trade, and interactive entertainment.

Against this backdrop, looking at Hong Kong makes it clear that there is a more critical question: Hong Kong’s first batch of licenses addresses “who can safely enter first,” but whether Hong Kong can form a truly competitive stablecoin ecosystem depends on “who will fill in the other four things after that.”

3. Issuance is not the end; ecosystem builders are the key

From the structural perspective of the global stablecoin market, the division of roles within the ecosystem has become increasingly clear.

The most prominent feature is that issuance is highly concentrated. For example, USDT and USDC combined account for over 86% of the total stablecoin market capitalization, but the issuers’ scale advantage does not naturally translate into ecosystem control. The real competitiveness of stablecoins often does not depend solely on issuance size; it more often depends on liquidity depth, channel coverage, and scenario penetration.

Take USDC as an example: although its market capitalization is only 42% of USDT’s, its on-chain transfer volumes, institutional payment scenarios, and activity within the developer ecosystem are clearly higher. Behind this is the role of distribution networks and scenario-anchoring capabilities, rather than just the size of issuance; and while Paxos is the legally designated issuer of PYUSD, what truly drives its expansion is PayPal’s account distribution capability.

All this indicates that stablecoin issuers and ecosystem builders have become two different sets of capability combinations:

Issuers are responsible for reserve management, compliance risk control, and redemption mechanisms—core tasks at the “issuance layer”;

Ecosystem builders are responsible for distribution channels, liquidity aggregation, scenario access, and commercial operations—core tasks at the “application layer.”

The two are not substitutes; they are an upstream-and-downstream synergy.

If we compare the stablecoin ecosystem to a building, then an issuer obtaining a license is only like receiving permission to construct the foundation. What truly determines how high the building can be is the load-bearing structure of each subsequent layer—distribution channels, trading liquidity, payment networks, scenario access, and compliant operating capabilities are precisely part of those load-bearing structures.

Therefore, the real challenge Hong Kong stablecoins face may never have been about “who can obtain a license,” but about “once you have a license, who can truly put it to use.”

This is also why, in the next stage, what becomes truly scarce in Hong Kong stablecoins may not necessarily be new issuers, but rather ecosystem-type platforms capable of taking on distribution, trading, payments, liquidity, and compliant operations.

In fact, even the first licensed institutions themselves are already demonstrating this through action. Reports say that Dingdian Financial plans to collaborate with selected enterprises as distribution partners to provide its stablecoin to the public; HSBC is preparing to reach users through two apps, PayMe and HSBC HK Mobile Banking.

In other words, even for the issuers that obtained licenses first, their first reaction after rollout is not “I can finally issue coins,” but “how should I distribute them.” This in itself shows that stablecoin is not a business that issuers can complete on their own; it is a systems project that must rely on multi-layer ecosystem collaboration.

And in that sense, in Hong Kong’s next stage, what is truly scarce may not just be new issuers, but ecosystem-type platforms capable of taking on distribution, trading, payments, liquidity, and compliant operations.

This is also the most worthy-to-be-seen position in this round of discussion: a comprehensive capability platform that can simultaneously connect the issuance end, circulation end, and usage end may truly determine the height that Hong Kong’s stablecoin ecosystem can reach.

The local Hong Kong licensed player OSL mentioned above has already clearly stated that it will actively cooperate with Hong Kong licensed stablecoin issuers, leveraging its strengths in distribution, liquidity, and infrastructure to promote relevant products and application scenarios. This kind of wording suggests that it is more proactively placing itself in a service role of laying the “capillary network” for this stablecoin ecosystem.

Objectively speaking, for a market that is just starting up and naturally needs multi-party collaboration, the scarcity of such roles may not be any lower than that of the issuance licenses themselves.

It may even be the key variable that determines whether Hong Kong stablecoins can secure a place in global competition.

Written in closing

Taking a broader perspective, the situation Hong Kong stablecoins face today is indeed not easy.

Looking inward, policy stances are unlikely to loosen in the short term; looking abroad, the barriers of user habits and network effects are already very high. Under this pattern, if Hong Kong’s stablecoin ecosystem stays only at the “licensing—issuance—compliance” layer, it may repeat the fate of virtual banks—where the system is well designed and the data looks acceptable, but the larger ecosystem fails to emerge for a long time.

But on the other hand, this is precisely where Hong Kong’s opportunity window lies.

The global stablecoin market is going through a profound paradigm shift. Stablecoins are no longer just a trading medium inside the crypto market; they are being reinterpreted as the next-generation foundation infrastructure for global payments and settlement. In this new paradigm, compliance capability is no longer the only competitive dimension. Distribution networks, payment scenarios, technical infrastructure, and ecosystem operation capabilities become equally—if not more—critical.

As an international financial center, Hong Kong already has natural advantages in institutional design and compliance governance. However, if these advantages are to be truly converted into competitive strength for the stablecoin ecosystem, relying solely on the first batch of licenses is clearly not enough. It requires payment companies, technology platforms, compliance middleware, Web3-native enterprises, and local licensed institutions to run the harder and more real work—distribution, liquidity, scenario anchoring, and operations—layer by layer.

The road after licensing is still long. The real competition for Hong Kong stablecoins is only just beginning.