HSBC and the world’s largest bank by total assets, the Industrial and Commercial Bank of China (ICBC), reportedly plan to apply for stablecoin licenses in Hong Kong as the region’s new regulatory regime takes effect.
According to a Monday report in the Hong Kong Economic Journal, both HSBC and ICBC signaled their intention to apply for a stablecoin license with the Hong Kong Monetary Authority (HKMA). Neither bank responded to Cointelegraph’s request for comment by publication.
The HKMA previously said it is likely to only issue a few stablecoin licenses at first. According to the report, Standard Chartered and ICBC are likely to receive their licenses in the first round, giving them a potential first-mover advantage.
The Hong Kong Economic Journal reported that at the end of August, 77 institutions had expressed interest in applying for a stablecoin license. Some applicants reportedly described the requirements as stricter than expected.
Industrial and Commercial Bank of China. Source: WikimediaRelated: China weighs yuan-backed stablecoins in major policy shift: Reuters
Stringent requirements for Hong Kong stablecoin issuers
On Aug. 1, Hong Kong’s new stablecoin regulatory framework came into effect with a six-month transition period. The new Stablecoin Ordinance criminalizes the offering or promotion of unlicensed fiat-referenced stablecoins to retail investors and sets a high bar of entry for issuers.
When the new rules took effect, stablecoin companies operating in Hong Kong reported double-digit losses. Some companies fell as much as 20% in a single day, but local market experts described this as a healthy correction, as the rules were found to be stricter than expected.
After setting the ground rules for stablecoin issuance, Hong Kong regulators moved their attention to crypto custody. In mid-August, the Hong Kong Securities and Futures Commission (SFC) issued immediately effective guidance on cryptocurrency custody standards, introducing sweeping security requirements and a ban on smart contracts in cold wallet implementations.
Related: China cracks down on stablecoin promotions, research and seminars
Hong Kong’s new stablecoin regime
The new stablecoin licensing regime has attracted significant attention since its rollout. In mid-August, the SFC warned that the introduction of the new local stablecoin regulatory framework had increased the risk of fraud.
Its statement on the matter suggested that the heightened speculation surrounding stablecoin news increased the risk of fraud. An official urged investors to exercise caution and avoid making irrational investment decisions driven by market hype or price momentum.
Magazine: Hong Kong hoses down stablecoin frenzy, Pokémon on Solana: Asia Express
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