Licensing is not the end goal: Stablecoin competition enters the second half

Article by: Xiao Xin

On April 10, 2026, the Hong Kong Monetary Authority officially issued stablecoin issuer licenses to two institutions, while bringing other applicant organizations into the review process, marking the substantive implementation phase of stablecoin regulation; however, less than a month later, on May 4, 2026, the HKMA clarified in LegCo that, before the launch of the first batch of stablecoins and market validation, they do not consider issuing new licenses. This statement clearly changed market expectations for “rapid expansion.”

Analysis of the three core regulatory dimensions: risk, cross-border, and expectations

1. Risk isolation and market capacity control

Regulators explicitly introduced the concept of “market capacity,” which refers to the matching relationship between the scale of stablecoin issuance and risk-bearing capacity. In the 2026 regulatory practice, the number of issuances is not the primary goal; controllable risk is the core standard. Key issues include: whether reserve assets have sufficient high liquidity, whether redemption runs could occur under extreme market conditions, and whether capital flows could impact the traditional banking system. Before these issues are fully validated, expanding market size could amplify systemic risks.

This strategy essentially adopts a “gradual expansion” mechanism, verifying through small-scale pilots before deciding whether to broaden scope.

2. Cross-border compliance complexity upfront

Stablecoins inherently possess cross-border circulation attributes, making their regulation no longer limited to a single jurisdiction. In the 2026 regulatory practice, Hong Kong explicitly requires: if cross-border applications are involved, relevant regional licenses must be obtained, and some scenarios require third-party verification. Meanwhile, Mainland China’s regulatory policies also impose constraints. Previously, authorities clarified that offshore issuance of RMB stablecoins requires approval from mainland regulators, meaning stablecoin issuance is not only a market activity but also a matter of multi-regulatory system coordination.

Therefore, Hong Kong’s regulators choose to identify cross-border risks early, before licensing, to avoid subsequent institutional conflicts. This strategy reflects a comprehensive lifecycle compliance management approach.

3. Managing market expectations: breaking the “license equals success” narrative

In recent years, the industry has gradually formed a perception: obtaining a regulatory license signifies long-term competitiveness. However, in 2026, Hong Kong regulators signaled a different message — licenses are just the starting point, not the end. They emphasize that stablecoin projects require ongoing evaluation, including on-site inspections, independent audits, and risk reviews. This means the regulatory threshold is not at licensing but during continuous operation. The goal is to reduce excessive speculation, prevent “license premium” phenomena, and guide the industry toward long-term value creation.

A typical case: dual-path pilot testing for ecosystem diversity. In 2026, Hong Kong chose to conduct parallel tests with different types of institutions to build a diverse stablecoin ecosystem. One path is led by traditional financial institutions. For example, a major bank plans to launch a Hong Kong dollar stablecoin in the second half of 2026, integrated with local payment and wealth management systems, achieving seamless connection with existing financial networks.

Another path involves a “bank + tech + Web3” joint model. For example, a stablecoin project launched through multi-party collaboration (planned to be phased in from Q2 2026), adopting a B2B2C structure, leveraging technology platforms and user ecosystems to cover broader scenarios.

These two paths represent “traditional financial extension” and “digital-native innovation,” respectively. Regulators compare their performance in risk control, user protection, and system stability through parallel pilots, providing a basis for future differentiated regulatory rules.

Regulatory intent analysis: From a macro perspective, Hong Kong’s current strategy is not just local regulatory adjustment but also the construction of a replicable stablecoin regulatory paradigm. By combining “small-scale licensing + long-term validation + multi-path pilots,” Hong Kong aims to establish a regulatory system tested by real markets. This system could become an important reference for other regions in policy formulation.

It’s worth noting that this model emphasizes “time for certainty,” i.e., extending validation periods to reduce systemic risks rather than pursuing short-term market scale.

Conclusion: From “speed competition” to “stability priority,” the core shift in Hong Kong’s stablecoin regulation in 2026 can be summarized as: moving from “expansion-oriented” to “quality-oriented,” and from “qualification competition” to “operational validation.” For the industry, this means the competitive logic is changing: future leaders will no longer be the earliest licensees but those who can sustain stable operations and pass regulatory scrutiny in real markets.

In the long term, this “slow variable” strategy may actually be more conducive to building a trustworthy digital financial infrastructure.