Hong Kong is preparing to issue its first batch of stablecoin issuer licences in the first quarter of the year, stepping up efforts to position itself as a regional hub for digital assets amid growing global competition.

Speaking at the World Economic Forum in Davos, Hong Kong Financial Secretary Paul Chan said the city’s approach to crypto regulation remains “responsible and sustainable,” according to the South China Morning Post.

Chan reportedly confirmed that the initial round of stablecoin licences is expected to be granted in the coming months.

Hong Kong Positions Stablecoins at the Core of Its Digital Finance Strategy

Chan framed stablecoins as part of a broader push to build a full digital asset ecosystem in Hong Kong, spanning regulated stablecoin issuance, licensed trading platforms, and tokenized financial products.

He described digital finance as a strategic growth pillar as the city seeks to maintain its status as a global financial center.

The stablecoin licensing regime, passed in 2025, sets out strict requirements for fiat-referenced stablecoin issuers.

These include rules on reserve backing, redemption rights, governance, and risk management, reflecting regulators’ focus on financial stability and consumer protection following volatility in global crypto markets.

Hong Kong’s stablecoin plans sit alongside an already active framework for crypto trading platforms.

Under rules enforced by the Securities and Futures Commission, 11 virtual asset trading platforms have received licences to date.

Approved operators include OSL, HashKey, and Bullish, according to the regulator’s public disclosures.

Beyond trading and stablecoins, Hong Kong is also pushing deeper into tokenization.

In November 2025, the Hong Kong Monetary Authority launched a pilot under Project Ensemble to test real-value transactions using tokenized deposits and digital assets, involving major banks and asset managers.

At the same time, regulators are consulting on additional proposals that would introduce new licensing regimes for crypto asset dealing, advisory, and management services.

Earlier this week, the Hong Kong Securities and Futures Professionals Association warned that tighter virtual asset management rules could deter traditional asset managers by raising compliance costs and slowing institutional participation.

Hong Kong Asset Managers Warn Crypto Rule Change Could Deter Traditional Funds

As reported, the Hong Kong securities industry is urging regulators to rethink proposed changes that would tighten rules around crypto exposure in traditional investment portfolios, warning the move could discourage mainstream asset managers just as the city seeks to expand its digital-asset market.

In a submission to the Securities and Futures Commission, the Hong Kong Securities and Futures Professionals Association argued against removing the long-standing “de minimis” exemption for Type 9 licensed managers, which currently allows limited crypto exposure without triggering a separate virtual asset management licence.

The proposal comes as Hong Kong broadens its digital-asset framework, with authorities consulting on new licensing regimes for virtual asset dealing, advisory, and management services.

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The Hong Kong securities industry is pushing back against a plan that would tighten the net around crypto exposure inside traditional portfolios, arguing the city risks scaring off mainstream asset managers just as it tries to build a deeper digital-asset market.

In a submission dated Tuesday, the Hong Kong Securities and Futures Professionals Association urged regulators to keep a long-standing “de minimis” carve-out for Type 9 licensed asset managers, warning that scrapping it would turn even tiny allocations into a full licensing trigger.

Type 9 is Hong Kong’s standard licence for discretionary portfolio managers, the permission most traditional fund managers hold to run client money under the SFC’s rules.

Proposed Rule Would Scrap 10% Crypto Threshold

Under today’s uplifted regime, Type 9 managers can invest less than 10% of a fund’s gross asset value in virtual assets without seeking a separate virtual asset management licence, as long as they notify the Securities and Futures Commission. The proposal under consultation would remove that threshold.

The industry group said the change effectively forces an “all-or-nothing” decision for firms that want to test crypto as a diversifier.

“This ‘all-or-nothing’ approach is disproportionate,” it wrote, adding that it would impose major compliance costs even when risk exposure stays limited.

It also urged regulators to bring the carve-out back in a clear, risk-based form. “We strongly propose reinstating a de minimis exemption,” the association said, arguing that managers below a set threshold should face a notification requirement rather than the full virtual asset management regime.

The submission lands amid Hong Kong’s broader effort to widen its digital-asset rulebook. The Financial Services and the Treasury Bureau and the SFC published consultation conclusions in December on licensing for virtual asset dealing services, and they opened a further public consultation on proposed licensing regimes for virtual asset advisory and management service providers.

Licensing Expansion Aims To Match Institutional Growth

Custody rules have become another pressure point. The association criticized proposals that would require virtual asset managers to use only SFC-licensed custodians, saying the mandate could prove unworkable for private equity and venture funds that buy early-stage tokens that local custodians do not yet support.

Hong Kong’s regulators have pitched the new licensing architecture as part of a push to bring more activity onshore, while tightening standards as institutional participation grows. Officials have also signalled they want a framework that can plug into existing regulated activity, rather than leaving crypto exposure to ad hoc interpretations.

The debate matters because it goes to how quickly traditional finance joins the trade. Keeping a 10% carve-out makes it easier for stock and bond managers to add a small sleeve of Bitcoin or other tokens, while removal raises the bar to a full licence even for experimentation, creating a higher fixed cost before firms see meaningful demand.

Hong Kong has tried to balance that tension by expanding licensing while also smoothing market plumbing in other areas, including steps aimed at improving liquidity at regulated virtual asset trading platforms.

Regulators have not finalised the advisory and management proposals, and the current consultation process is designed to gather feedback before legislative work moves forward. The government has said it plans to refine proposals and take legislation to the city’s legislature in 2026.

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