After the Hong Kong "Stablecoin Regulation" comes into effect, a 6-month transition arrangement will be established! CITIC Securities: Follow the first batch of stablecoin license recipients.

Hong Kong's pace in the regulation of virtual assets continues to accelerate. According to a report from Hong Kong Radio on July 29, the "Stablecoin Ordinance" will take effect this Friday. The Hong Kong Monetary Authority stated that there will be a 6-month transitional arrangement to handle institutions that previously had stablecoin issuance businesses in Hong Kong. This transitional arrangement aims to ensure a smooth market transition while also providing temporary licenses for issuers who meet regulatory requirements. CITIC Securities' research report pointed out that with the official implementation of the "Stablecoin Ordinance", the market should continue to focus on issuers that may obtain the first batch of scarce licenses and the scene platform that definitively participates in the creation of stablecoin use scenarios as the two main lines.

1. The "Stablecoin Regulations" Officially Come into Effect and Transition Arrangements

On July 29, it was reported that according to an official announcement, the Hong Kong Monetary Authority (HKMA) today released multiple guidelines and explanatory documents regarding the regulatory system for stablecoin issuers, which will take effect on August 1, 2025: the "Regulatory Guidelines for Licensed Stablecoin Issuers" consultation summary, the "Guidelines for Combating Money Laundering and Terrorist Financing (Applicable to Licensed Stablecoin Issuers)" consultation summary, the summary of the issuance of currency documents, and the summary of licensing documents. These two sets of guidelines will be published in the Gazette on August 1, 2025. With the regulatory system officially in effect, market participants should comply with the "Stablecoin Ordinance" and relevant guidelines.

The Monetary Authority stated that a 6-month transition arrangement will be established to handle institutions that have already issued stablecoin businesses in Hong Kong.

Temporary License: Issued temporary licenses to issuers capable of complying with regulatory requirements.

Orderly cessation of business: If the issuer fails to meet the relevant requirements within 3 months after the regulations come into effect, they must orderly cease their business in Hong Kong within 4 months after the legislation takes effect; if the Financial Commissioner is not satisfied that the issuer has the ability to comply with licensing criteria and regulatory requirements, the issuer must orderly cease their business in Hong Kong within one month of receiving the refusal notice.

2. License Application Timeline and the Prudential Attitude of the Monetary Authority

The Hong Kong Monetary Authority encourages institutions intending to apply for a license to contact the Monetary Authority via the official email address on or before August 31, 2025, so that the Monetary Authority can communicate regulatory expectations and provide appropriate feedback. Licensing will be an ongoing process, and if individual institutions believe they are adequately prepared and wish to be considered as soon as possible, they should submit their applications to the Monetary Authority on or before September 30, 2025.

The CEO of the Monetary Authority, Eddie Yue, spoke again about stablecoins. He pointed out that recently, with the hype surrounding the concept of stablecoins, there has been an excessive excitement in the market. Some listed companies, regardless of whether their main business is related to stablecoins or digital assets, as long as they claim to have intentions to develop stablecoin businesses, they can "turn stone into gold," leading to an immediate rise in stock prices, a significant increase in trading volume, and a substantial boost in the company's visibility.

Yau Wai Man emphasized: "In fact, we have made it clear earlier that in the initial stage, at most only a few stablecoin licenses will be granted, in other words, there will be no shortage of disappointed parties. Even if licenses are obtained, considering our desire for steady development, along with the resource investment required in the early stages, there will be a certain degree of uncertainty regarding the contribution to the company's short-term profitability. We hope investors remain calm and think independently when digesting the market's 'positive' news."

3. CITIC Securities Research Report: Follow the First Batch of Approved Entities and Application Scenarios

News on July 30, CITIC Securities Research Report said that on July 29, the HKMA issued a series of documents on the regulatory system for stablecoin issuers implemented on August 1. The core is the Guidelines for the Supervision of Licensed Stablecoin Issuers, and the most significant guidance at the current application stage is the Summary of the Licensing System for Stablecoin Issuers. On the timeline, the HKMA encourages prospective applicants to contact the regulator before 31 August, and the application deadline for mature applicants is 30 September, and the number of the first batch of licences is only single digits, which is expected to land before the end of the year. It is recommended to continue to pay attention to the two main lines of issuers that may obtain the first batch of scarce licenses, and the scenario platform that definitively participates in the creation of stablecoin usage scenarios.

IV. Market Dynamics and Investment Warnings

Linking Numbers: On July 13, Hong Kong Stock Linking Numbers (02598.HK) announced plans to place 38.4 million new H shares, expecting to raise HKD 394 million. The net proceeds are intended for innovation and application of blockchain and other innovative technologies in the global payment sector, global business and license expansion, and general corporate purposes.

Jiu Fang Intelligent Investment: On July 16, it was reported that the Hong Kong stock listed company Jiu Fang Intelligent Investment announced a proposed placement of up to 20 million shares, with a net expected proceeds of HKD 746 million, which is intended to be used for cultivating and developing on-chain financial resources, strategically investing in RWA underlying assets, digital asset exchanges, digital asset trust banks, and stablecoin operating entities.

Pandora Bitcoin ETF: On July 16, news came that Pandora Limited announced that its Pandora Bitcoin ETF (02818.HK) will officially be listed on the Hong Kong Stock Exchange on July 18, becoming the first Bitcoin ETF approved for listing in Hong Kong this year.

Investment Warning: The Hong Kong Monetary Authority reminds market participants to act with caution when conducting public communications and to avoid making statements that may be misunderstood or lead to unrealistic expectations. Among them, under the Stablecoin Ordinance, falsely claiming to be a licensee or applicant is illegal. As of today, the Hong Kong Monetary Authority has not issued any licenses. The public can refer to the licensed stablecoin issuers announced on the Monetary Authority's website in the future. The public should remain vigilant towards any claims of stablecoin issuers being regulated or licensed in Hong Kong, as well as those claiming to be applying for a license. Members of the public who hold unlicensed stablecoins must bear their own risks.

Conclusion:

The effectiveness of the "Stablecoin Ordinance" in Hong Kong marks a solid step forward in the regulation of virtual assets in the region. The transition arrangements and prudent approach of the Monetary Authority aim to ensure the steady development of the stablecoin market. For investors, while following the first batch of license holders, it is more important to remain calm and think independently, be wary of market speculation, and fully understand the risks associated with unlicensed stablecoins.