Hong Kong is currently testing three different digital currency pathways.

Headline: Blockchain Headlines

Recently, Hong Kong Monetary Authority Deputy Chief Executive Chen Weimin stated at the HSBC Global Investment Summit that Hong Kong, as a pioneer in the stablecoin licensing system, must proceed cautiously in its development. The HKMA has set quite high thresholds for itself, preferring a cautious start—“learning to walk before running.”

He revealed that the authority spent about six months reviewing the first batch of 36 applications, ultimately granting licenses to only two applicants, emphasizing the need to ensure that issuers have viable business use cases and comprehensive risk management capabilities.

Chen Weimin pointed out that Hong Kong just issued the first two stablecoin issuer licenses last week. As a pioneer, it is necessary to review each application according to legal standards to ensure that issuers meet the requirements. More importantly, they hope licensees have feasible use cases, that their businesses can sustain growth, and that they create value for enterprises and individuals. At the same time, licensees must have the ability to manage various risks, including maintaining peg and stability mechanisms, reserve management, private key security, anti-money laundering, and operational risks.

He stated that Hong Kong is currently experimenting with three paths: central bank digital currency (CBDC), tokenized deposits, and stablecoins. The final form of future currency remains unknown, but they aim to explore all three tracks. However, he believes that ultimately, trust will still be built on sovereign central bank currencies. Based on this, tokenized deposits can develop as a form of commercial bank currency, and stablecoins backed by fiat currency can facilitate adoption among the younger generation. Nonetheless, underlying trust still depends on sovereign currencies.

Chen Weimin believes that regulations related to digital assets will become clearer. Regulatory agencies across different jurisdictions—Europe, America, and Asia—are gradually establishing frameworks. A consensus is forming: digital assets must be regulated. He pointed out that the role of regulation involves not only collaborating with private institutions to promote industry development but also early identification and intervention in risks.

Chen Weimin introduced that the HKMA’s Ensemble project brings together stakeholders such as banks, regulators, infrastructure providers, and tech companies to identify pain points, solutions, and risks within the financial system. So far, 20 use cases have been reviewed, and private sector entities play a very important role in shaping the regulatory framework and ecosystem.

At the same event, Valerie Urbain, CEO of the European Central Securities Depository (Euroclear), stated that this year is a critical year for moving from the “concept” phase of digital assets into larger-scale experimentation. The bank is collaborating with the French central bank to promote euro commercial paper tokenization. She emphasized that to advance to the next stage and drive market transformation, cooperation must be strengthened to jointly promote further development of tokenization and digital assets. However, she also pointed out that balancing market stability and innovation is not easy, and this remains a common concern among European regulators.