But pressure from Beijing is already complicating that vision, with mainland-linked firms now expected to pull back.

Mainland Firms Step Aside

Chinese internet giants, state-owned banks, and other mainland enterprises operating in Hong Kong have been told not to participate in stablecoin ventures for now. Some that were preparing applications are reportedly shelving plans.

This marks a sharp reversal from earlier enthusiasm. JD.com, Ant International, and a subsidiary of China Merchants Bank all registered entities in Hong Kong just weeks before the framework launched, joining 77 institutions — including HSBC and ICBC – that expressed interest in applying.

Beijing’s Mixed Messages

China has long taken a cautious stance on stablecoins. Regulators recently told firms to stop publishing research and hosting seminars, citing fraud risks. Yet at the same time, officials have floated the idea of offshore yuan-pegged stablecoins to promote the renminbi abroad. Conflux has already issued such a token for Belt and Road economies, though it remains barred in mainland China.

Hong Kong’s Dilemma

For Hong Kong, the pushback is awkward. The Hong Kong Monetary Authority has signaled it may ease capital rules to encourage banks to hold compliant stablecoins. But if mainland players step aside, the field may be left to foreign banks and global issuers, undercutting Hong Kong’s pitch as China’s digital finance gateway.

What’s Next

The situation underscores a bigger question: can Hong Kong pursue its crypto ambitions independently, or will Beijing’s caution set the limits? For now, the city’s stablecoin framework looks strong on paper, but without Chinese heavyweights, its impact may be muted.

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