Starting in March, Hong Kong will begin issuing licenses to stablecoin issuers, according to Reuters.

Eddie Yue Wai-man, the chief executive of the Hong Kong Monetary Authority (HKMA), mentioned that only a limited number of stablecoin licenses will be granted at first.

The financial regulator in Hong Kong has announced that it will start issuing licenses for stablecoin issuers in March. (Shutterstock/Modified by CoinDesk)

Key points:

• The monetary authority of Hong Kong is set to release the city’s inaugural stablecoin issuer licenses in March, but only a very limited number are anticipated to be approved at the outset.
• According to HKMA chief Eddie Yue, the review process for licensing is almost complete and will focus on risk management, anti-money-laundering protocols, and the quality of the underlying assets.
• This initiative coincides with the growing acceptance of stablecoins, which now represent an asset class worth approximately $300 billion, projected to expand into the trillions and regarded by certain global banks as essential for future digital trade settlements.

The Hong Kong financial regulator is expected to provide a first round of “very few” stablecoin issuer licenses in March, as reported by Reuters.

Eddie Yue, the chief executive of the HKMA, indicated his expectation of issuing the initial set of stablecoin issuer licenses in March while speaking at a meeting of the Hong Kong Legislative Council on Monday.

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Nevertheless, he specified that only a “very small number” would be approved initially.

Stablecoins, which are a category of cryptocurrencies tethered to fiat currencies like the U.S. dollar, are witnessing rising adoption globally as major jurisdictions establish regulatory frameworks. Last year, stablecoins facilitated $35 trillion in transactions on blockchain platforms.

Currently valued at $300 billion, Citi has projected that stablecoins could evolve into a market worth between $1.9 trillion and $4 trillion. Standard Chartered’s CEO Bill Winters noted that Hong Kong’s initiative in tokenized money and stablecoins could establish the groundwork for a new era in digital trade settlements.

Yue highlighted that the application review process is close to being finalized.

The head of the HKMA emphasized that the criteria for evaluating stablecoin issuer license approvals will concentrate on aspects like risk management, anti-money laundering strategies, and the assets backing the stablecoins.

He also mentioned that licensed issuers must adhere to local regulations concerning cross-border operations, adding that future mutual recognition agreements with other jurisdictions may be considered.