With the official implementation of the Hong Kong Stablecoin Ordinance on August 1, more and more institutions are interpreting the Hong Kong Stablecoin, and their views are divided into two major schools: one is the capital market and Chinese institutions, which are seeking Hong Kong stablecoin licenses or related ecological layout; the other is that after many institutions have analyzed the details and guidelines of the Stablecoin Ordinance, they lament that the Hong Kong Stablecoin is a useless thing with active licensing but conservative implementation.
Compliance requirements
Those who call for the abolition of Hong Kong's stablecoins do so mainly because the compliance requirements are very strict. First, they require licensing: all stablecoins issued in Hong Kong and entities that promote stablecoins to the Hong Kong public must be licensed, including
USDT
and
USDC
, There will be a 6-month transition period, otherwise the business will be terminated; secondly, all users holding fiat stablecoins need to do KYC real-name verification. This requirement is more like a bank, but for on-chain ID model? Third, with such strict compliance, Hong Kong's stablecoin is largely unable to integrate into the on-chain DeFi ecosystem.
The first batch may be 5.5licenses
It is said that hundreds of institutions have inquired and forty or fifty institutions have applied for stablecoin licenses, but according to regulatory information, the first batch of licenses is likely to be between 5-6pieces.
Core Guidelines for the Stablecoin Regulations
The guidelines for the stablecoin regulations launched this time have specifically refined the reserve assets that were previously vaguely handled. The content is as follows:
Scope and composition of reserve assets
2.3.1.Schedule to the Stablecoin Regulations
b. Has a remaining term of not more than one (
) year;c. (1) According to the "Banking Industry Capital Capital text="">Rules" (Chapter
155L ) Chapter 55 d. highly liquid; and
e. (iv) cash receivables arising from overnight reverse repurchase agreements pledged as collateral under item (3) and with minimal counterparty risk; (v) investments in investment funds under item (1), (2), (3) and/or (4) which are specifically established and used solely for the management of the licensee's reserve assets; and leaf="">or
(6) other asset types approved by the HKMA.
collectively referred to as Eligible Assets.
2.3.2.For the avoidance of doubt, reserve assets may consist of Eligible Assets in tokenized form. In this regard, the licensee should demonstrate to the satisfaction of the HKMA how the tokenized assets meet the requirements of high quality, high liquidity and minimal investment risk.
Huaxia Digital Capital Interpretation：From this guideline, we can see the similarities and differences between Hong Kong's stablecoin and the US stablecoin:
1
, both are highly liquid assets, but because Hong Kong allows the issuance of multi-currency stablecoins, it does not specify the currency of cash and short-term bank deposits, that is, Hong Kong's issuance of US dollar stablecoins is US dollar cash and32
public bonds with a remaining maturity of less than 1year, issued by the government, central bank, etc., including the Hong Kong government's green bonds, China's (issued by the Ministry of Finance) offshore RMB treasury bonds and the central bank's offshore RMB bonds, but local government bonds such as dim sum bonds are not included; 3
45 I won't discuss overnight repos, but the investment fund is quite interesting. It invests in liquidity-managed funds across the aforementioned asset classes, such as short-term bond funds. These funds have strong liquidity conversion capabilities and can meet liquidity needs. This is a very flexible model. Unfortunately, money market funds were not mentioned, meaning that money market funds are unlikely to become reserve assets for Hong Kong's stablecoin for the time being. This is surprising, as Hong Kong already has a large number of USD, HKD, and RMB money market funds, and some of these funds already have tokenized assets. Issuer requirements
There are 3 main requirements for issuers in Hong Kong stablecoins and guidelines: sustainability, application scenarios, anti-money laundering technology and management capabilities. 1, Sustainability: -, with technical and financial resources, 2500,000 Hong Kong dollars or not less than 1%
-
Have the ability and plan for sustainable operation. You cannot just apply for it and then throw it away or fail to operate. 2. Scenario:
-
Have the ability and plan for sustainable operation. You cannot just apply for it and then throw it away or fail to operate. -Reserve assets: There must be business scenarios for reserve assets or the generation of reserve assets.
-Business plan, business model, operation plan, implementation plan.
3. , anti-money laundering capabilities (this aspect is actually the strength of exchanges, wallets, and payment companies)
-Meet regulatory requirements, reserve asset management, redemption, risk management and anti-money laundering
-Risk control capabilities
-Compliance plans and system resources
System requirements
The stablecoin regulations and guidelines also extensively mention the requirements for stablecoin-related systems, such as tokens, wallets, private keys, etc.
Huaxia Digital Capital Interpretation: Currently, the requirements for stablecoin issuers in Hong Kong are still relatively high. Money such as capital is not a problem. The key is to have application scenarios and
AMLand other capabilities.
Especially for offshore RMB stablecoins, it is estimated that non-Chinese institutions cannot do it. The Chinese institutions mentioned here refer to central state-owned enterprises and their institutions stationed in Hong Kong, particularly those with offshore RMB operations, with Bank of China (Hong Kong) serving as a clearing and settlement bank being a key focus. Active internet technology companies will likely continue to focus on Hong Kong dollar and US dollar stablecoins, rather than developing offshore RMB stablecoins. We have also noticed that some Chinese listed companies, facing difficulties in obtaining stablecoin licenses in Hong Kong, have gone to the United States to apply for stablecoin licenses, or cooperated with Abu Dhabi, Dubai, or the European Union's MiCA exchange licenses to form a good industrial digital asset layout and a comprehensive R&D stock linkage strategy.
Kikyo
Weatherly
Catherine
Anais