Hong Kong to introduce virtual asset licensing bill as stablecoin issuers launch HKD tokens

Hong Kong’s government has announced a comprehensive strategy to strengthen its position in offshore yuan business and develop the local virtual asset ecosystem. During a Legislative Council briefing, Secretary for Financial Services and the Treasury Christopher Hui outlined upcoming policy shifts aimed at boosting the region’s financial sector and expanding the scope for licensed entities in the digital asset market.

Focus on offshore yuan growth

Hui emphasized that financial services remain Hong Kong’s major advantage, highlighting their prominence in the city’s First Five-Year Plan for 2026–2030 and the 2026 Policy Address. The Hong Kong Monetary Authority (HKMA) is pursuing talks with the People’s Bank of China (PBOC) to refine the currency swap program and will soon launch a seven-day offshore yuan liquidity facility.

Additionally, the HKMA is evaluating introducing short-term debt instruments to enrich the offshore yuan rate structure. Hong Kong Exchanges and Clearing (HKEX) is creating a new offshore renminbi bond index to serve as a benchmark for exchange-traded funds, with plans to allow Northbound Bond Connect holdings to be used as collateral across its major clearing houses from November.

Offshore yuan lending in Hong Kong reached a record 935 billion yuan in 2025, with bond issuance holding at 1 trillion yuan for the second year running. The RMB Business Facility has expanded to 500 billion yuan, with loan terms extended to three years for greater flexibility.

Stablecoin regulation and new issuers

Hui confirmed that the government will introduce an amendment this year to establish a licensing regime covering trading, custody, advisory, and management functions for virtual assets. The Stablecoins Ordinance, effective from August 1, 2025, prompted 36 application submissions for stablecoin issuer licenses by the end of September. Two entities have received stablecoin issuer licenses so far.

Despite the government’s efforts to promote regulated stablecoin trading on licensed platforms, market infrastructure for this segment remains limited.

In his address, Hui made clear that the government intends to continue its spending in Hong Kong dollars and maintain the currency’s peg to the US dollar, opting not to pursue a link to the yuan or adopt a floating rate.

Bank-backed stablecoins debut

HSBC, one of Hong Kong’s largest banking groups, has announced the forthcoming launch of “HSBC RedCoin,” a Hong Kong dollar-pegged stablecoin. According to HSBC, an initial rollout will be exclusive to the bank’s PayMe wallet and mobile app in the second half of the year.

A recent survey by HSBC of over 1,000 customers revealed that 74% could identify at least one use case for stablecoins, while 25% mistakenly believed that these tokens are issued by the government.

Anchorpoint Financial, backed by Standard Chartered, HKT, and Animoca Brands, received the second issuer license. The company began testing its HKDAP Hong Kong-dollar stablecoin with a limited group of professional investors in August.

Both licensed stablecoins are pegged to the Hong Kong dollar, avoiding any connections to the yuan. In February, the PBOC and seven other agencies reasserted the prohibition against unauthorized issuance of yuan-linked stablecoins both domestically and abroad, restating that any renminbi-pegged coins require official approval.

Mini dictionary: Anchorpoint Financial, a digital asset venture supported by key financial and technology groups such as Standard Chartered, HKT, and Animoca Brands, focuses on developing Hong Kong dollar-pegged stablecoins for local market use.