Hong Kong stablecoin new regulations implemented: Concept stocks collectively plummet, is the scarcity of licenses and tightening regulation the main reason?

On the first day of the implementation of Hong Kong's Stablecoin Regulation, the Capital Market, which had been lively for nearly two months, cooled down. Wind data shows that on August 1, the concept stocks of A-shares and Hong Kong stocks related to stablecoins collectively declined. Among them, Hong Kong's Yau Chai Securities Financial fell nearly 20%, Yunfeng Financial dropped over 15%, and companies like OKChain, Lianlian Digital, and Guotai Junan International saw significant declines. Unlike May 21 when the draft of the Stablecoin Regulation was passed by the Hong Kong Legislative Council, the Hong Kong Monetary Authority (hereinafter referred to as "HKMA") did not release any information related to stablecoins on its official website on August 1. Is this collective decline an overreaction by the market, or is there something else going on?

1. The issuance is slower than expected: regulatory standards are strict, and the supply is limited

On July 29, the Hong Kong Monetary Authority's official website released the licensing system document for stablecoin issuers. During a technical briefing held the same day, the Hong Kong Monetary Authority stated that the first batch of licenses for Hong Kong stablecoin issuers is expected to be issued in early 2026. At the same time, the Hong Kong Monetary Authority emphasized concerns about money laundering risks and clearly stated that the identities of initial compliant stablecoin holders in Hong Kong must be verified, which implies a certain degree of real-name system. In addition, recent officials from the Hong Kong Monetary Authority have repeatedly emphasized that only a single-digit number of licenses are expected to be issued in the first batch.

"The regulatory standards are stricter than the market expected, the licensing time is later than the market expected, and the number of licenses is fewer than the market expected, so the stock prices of stablecoin concept stocks will naturally adjust." Zou Chuanwei, director of the Jiangsu Institute of Digital and Technological Finance, stated to Caijing.

"Overall, the market reflects expectations regarding the implementation of Hong Kong's stablecoin policy." Zheng Lei, Chief Economist of Samoyed Cloud Technology Group, told "Finance" that the Hong Kong Monetary Authority's attitude indicates that safety and stability will be prioritized during the initial licensing phase, which may mean that certain popular institutions anticipated by the market will miss out on the first batch of licenses.

2. Concept Stocks Correction: Market Overheating and Rational Return

On May 21, since the "Stablecoin Regulation Draft" was passed by the Hong Kong Legislative Council, the concept of stablecoins has been continually heating up in the Capital Market. Yu Weimen mentioned in an article on July 23: "Some listed companies, regardless of whether their main business is related to stablecoins or digital assets, as long as they claim to have the intention to explore stablecoin business, it is like 'turning stone into gold', and the stock price will rise accordingly, the trading volume will increase significantly, and the company's visibility will also be greatly enhanced." He stated that with the rising popularity of the stablecoin concept, there has been an emergence of overly exuberant sentiment in the market.

On July 3, Hong Kong stocks announced that multiple points of intelligence are preparing to apply for a stablecoin license in Hong Kong, and the stock price rose by more than 20% on that day, with an intraday increase close to 90%. A-share investors also showed enthusiasm for stablecoins. On the morning of July 29, rumors circulated in the market about "Hang Seng Electronics cooperating with Ant Group on stablecoins," and Hang Seng Electronics' stock price hit the daily limit. The next day, an analyst from Huafu Securities claimed to have forwarded the message, but it was later confirmed to be false.

Virtual asset trading related to stablecoins is also in high demand. On June 25, Guotai Junan International announced that it has been approved to upgrade its securities trading license, allowing it to provide comprehensive virtual asset-related trading services. The company's stock price soared nearly 200% on that day. As of August 1, Guotai Junan International's stock price was HKD 5.71 per share, an increase of nearly 380% compared to before the license upgrade.

Wind data shows that since May 21, the A-share stablecoin index has risen by over 25%; some stablecoin concept stocks in the Hong Kong stock market have seen massive gains, with Ouke Cloud Chain rising by over 185%, Yaocai Securities Financial up 86%, and Yunfeng Financial rising by 55.9%.

In response to the enthusiasm of the Capital Market, Yu Weiwen has twice published articles to "cool down" the stablecoin. On June 23, Yu Weiwen published an article titled "The Stability and Sustainable Development of Stablecoins" stating: "As the executor of the stablecoin regulatory system, we certainly appreciate the public's interest in stablecoins, but due to the responsibilities of regulators, I also want to cool things down, allowing everyone to view stablecoins in a more objective and calm manner." A month later, Yu Weiwen published again stating, "The cooling efforts still need to be strengthened." He bluntly pointed out that the current discussions surrounding stablecoins are overly conceptualized and there is a trend of bubble formation.

"We have previously made it clear that in the initial stage, we will only issue a few stablecoin licenses at most. In other words, there will be quite a few disappointed individuals." Yu Weiwen further stated that even if a license is obtained, there will be a certain degree of uncertainty regarding its contribution to the company's short-term profitability, and he hopes that investors will remain calm and think independently while digesting the market's "positive" news.

After the market closed on July 29, the Hong Kong Monetary Authority announced that it does not plan to issue licenses within the year. "This is a significant deviation from the market's earlier prediction that stablecoins would advance rapidly starting in August," said Zheng Lei, indicating that speculation in the Capital Market regarding stablecoins will cool down at least until early next year. Since July 30, stablecoin concept stocks have collectively pulled back. Wind data shows that in the last three trading days, concept stocks such as Yaocai Securities Finance, Lianlian Digital, and Yunfeng Financial have seen cumulative declines of over 20%.

3. Who Seizes the Initiative? The License Competition Intensifies

Despite the licensing pace being slower than expected, with the formal implementation of the "stablecoin regulations," the market remains highly focused on the list of stablecoin issuers in Hong Kong. CITIC Securities released a research report recommending continued attention to issuers that may obtain the first batch of scarce licenses and to scenario platforms that ensure participation in the creation of stablecoin usage scenarios as two main lines.

In the context of changes in the pace of card issuance, who will be the first to receive a license? In a previously published article, Yu Weiwen mentioned some licensing requirements for stablecoin issuers, including that licensed stablecoin issuers must have real application scenarios, possess sufficient supporting capabilities, essential skills, and experience in different fields, and have abilities in technology security, risk control, and anti-money laundering, among others. License applicants must have a specific and feasible business plan and possess adequate financial resources to support the business plan.

"The Hong Kong Monetary Authority has already announced the requirements for licensed institutions." Chow Chuan-wei stated, "First, there should be usage scenarios for stablecoins; second, there should be blockchain technology reserves to meet regulatory compliance requirements, including anti-money laundering requirements." Regarding the scenarios, Chow Chuan-wei believes that currently, over 90% of the trading volume of US Dollar stablecoins comes from crypto asset trading. Hong Kong may place greater emphasis on the application of Hong Kong Dollar stablecoins in real economy scenarios such as cross-border trade settlement.

According to Yu Weiwen, as of July 23, dozens of institutions have actively contacted the Hong Kong Monetary Authority team, with some explicitly expressing their intention to apply for a stablecoin license. Public information shows that institutions interested in applying for a stablecoin license in Hong Kong include payment institutions, internet companies, commercial banks, and others.

Among the institutions that intend to apply for a stablecoin license, JD Group, Standard Chartered Bank, and Yuan Coin Technology in the Hong Kong Monetary Authority's stablecoin issuer sandbox, as well as Bank of China (Hong Kong) and Ant Group, which are not in the sandbox, are the first popular candidates for licensing that are hotly discussed in the market.

On June 12, Ant Group's two major business segments, Ant International and Ant Digital Technology, announced that they would apply for stablecoin issuer licenses in Hong Kong. According to industry insiders, Ant Group's simultaneous application for both licenses is expected to increase the chances of obtaining the licenses.

On June 17, Liu Qiangdong, chairman of the board of JD.com, expressed the hope to apply for stablecoin licenses in all major currency countries and regions worldwide. As of June 19, JD.com's stablecoin has entered the second phase of sandbox testing, with testing scenarios mainly including cross-border payments, investment transactions, retail payments, etc. In the future, it will provide retail and institutional mobile and PC application products.

According to media reports, Liu Yu, the CEO of Yuan Coin Technology, stated in a recent interview that they intend to issue the HKD stablecoin on the Ethereum public chain. Several industry insiders told Caijing that JD.com and Yuan Coin Technology had previously entered the stablecoin issuer sandbox, making them more familiar with the relevant mechanisms and processes, thus increasing their chances of being among the first to obtain a license.

On July 31, Judy Hsu, the CEO of Standard Chartered Hong Kong and Greater China & North Asia, stated that the company is studying the latest regulatory documents on stablecoins released by the Hong Kong Monetary Authority and aims to submit an application as soon as the Stablecoin Ordinance comes into effect. Among the aforementioned popular license-seeking institutions, Bank of China (Hong Kong) has yet to disclose related information. Several industry insiders told Finance that Bank of China (Hong Kong) will also apply for a stablecoin license in Hong Kong.

The "Finance" inquired with Bank of China Hong Kong about whether to apply for a stablecoin issuer license and subsequent plans in the stablecoin field. Bank of China Hong Kong replied that "there is currently no content to respond to." Both Bank of China Hong Kong and Standard Chartered Bank are note-issuing banks in Hong Kong, with the latter having already entered the Hong Kong stablecoin issuer sandbox, and both are considered very likely to be among the first batch to obtain a license.

However, as the pace of licensing by the Hong Kong Monetary Authority changes, market expectations also shift accordingly. Zheng Lei believes that the Hong Kong Monetary Authority's attitude indicates that it will prioritize safety and stability as more important considerations in the early stages of licensing, which may mean that certain popular institutions expected by the market will miss out on the first batch of licenses.

Conclusion

The enactment of the "Stablecoin Ordinance" in Hong Kong marks a crucial step for Hong Kong in the field of digital finance. However, the collective fall of concept stocks on the first day reflects the market's reaction to strict regulatory standards, the scarcity of licenses, and the slower-than-expected licensing timeline. This licensing battle will continue to intensify, and ultimately, who can seize the opportunity will depend on whether they possess compliance, scenarios, and technological strength.