HSBC and Standard Chartered Are About to Issue Stablecoins in Hong Kong

Banks Are Coming for Tether's Business

Something that crypto purists said would never happen is about to happen. HSBC and Standard Chartered, two of the oldest and largest banks on earth, are set to receive Hong Kong's first stablecoin issuer licenses as early as March 24. Bloomberg broke the story on March 13, and the South China Morning Post confirmed it with sources close to the Hong Kong Monetary Authority. These aren't small crypto startups getting regulatory approval. These are institutions with combined assets of over $6 trillion that are about to enter the stablecoin business with full government backing.

The significance here goes far beyond Hong Kong. This is the first time that major global banks have received explicit regulatory licenses to issue stablecoins under a comprehensive legal framework. It's the clearest signal yet that stablecoins are transitioning from crypto's wild west into regulated financial infrastructure, and that traditional banks intend to be the ones building it.

Who's Getting Licensed

The Hong Kong Monetary Authority (HKMA) received 36 applications under the Stablecoins Ordinance, which took effect in August 2025. Out of those 36, only a "very small number" will receive approval in this first batch. Based on reporting from Bloomberg and SCMP, the confirmed first-batch recipients include:

HSBC is the largest bank in Hong Kong and one of three banks authorized to print physical Hong Kong dollar banknotes. Its entry into stablecoins is being framed internally as a natural extension of its note-issuing role. The bank reportedly plans to issue a Hong Kong dollar-pegged stablecoin initially, with potential expansion to other fiat currencies.

Standard Chartered is coming at this from a different angle, through a joint venture called Anchorpoint Financial. This is a partnership between Standard Chartered's Hong Kong arm, Animoca Brands (the Web3 gaming and investment giant), and HKT (Hong Kong Telecom). Anchorpoint has been the most visible applicant in the HKMA's stablecoin process and is also targeting an HKD-pegged stablecoin.

Other high-profile applicants include Ant Group's digital technology unit, Bank of China Hong Kong, and reportedly ICBC. Whether any of these make the first batch or have to wait for subsequent approval rounds remains unclear.

What the Rules Require

The Stablecoins Ordinance is one of the most detailed regulatory frameworks for stablecoins anywhere in the world. Licensed issuers must meet several strict requirements that effectively shut out the kind of fast-and-loose operations that characterized early stablecoin issuance.

Full 1:1 reserve backing in high-quality, liquid assets held under trust arrangements with approved custodians. No fractional reserves, no yield-generating strategies with the backing assets, no creative accounting. Every stablecoin in circulation must have a corresponding dollar (or HKD) sitting in a segregated account.

Redemption at par value within one business day. If you hold an HSBC stablecoin and want to cash out, the bank must honor that redemption at face value within 24 hours. This eliminates the de-peg risk that has plagued smaller stablecoins and addresses one of the biggest concerns regulators have about the asset class.

No interest payments to holders. This is a crucial distinction from traditional bank deposits. Licensed stablecoins in Hong Kong cannot pay yield, which means they're designed to function as pure payment instruments rather than investment products. This also keeps them out of the securities regulation framework that has complicated stablecoin classification in the United States.

Independent audits and AML/KYC compliance. Standard banking-level anti-money laundering and know-your-customer requirements apply. Issuers must undergo regular independent audits of their reserves and operations. This is the part that makes it nearly impossible for existing crypto-native stablecoin issuers to compete on the same terms unless they substantially upgrade their compliance infrastructure.

Why This Matters for Tether and Circle

The entry of HSBC and Standard Chartered into stablecoins creates a direct competitive threat to Tether (USDT) and Circle (USDC), which together control over 90% of the global stablecoin market. Tether's market cap currently sits at roughly $140 billion, while Circle's USDC holds about $60 billion. These are enormous numbers, but they've been built in a regulatory gray zone that Hong Kong's framework is designed to formalize and, eventually, replace.

The competitive dynamic is straightforward: if you're a business or financial institution in Asia that needs to move value using stablecoins, would you rather use Tether (issued by a company that has faced persistent questions about its reserve transparency) or an HSBC stablecoin that's fully regulated by the HKMA, backed by audited reserves, and issued by a bank you already have a relationship with? For institutional and corporate users, the answer is obvious.

Circle is in a better competitive position than Tether because it has always prioritized regulatory compliance. But even Circle faces a challenge: bank-issued stablecoins come with implicit government backing that no independent issuer can match. When HSBC issues a stablecoin, the market treats it as having the same credit quality as HSBC itself, which is meaningfully different from trusting a tech company to maintain reserves.

The real question is whether Hong Kong-licensed stablecoins will be denominated in HKD or USD. The initial licenses appear to focus on HKD-pegged tokens, which limits their direct competition with Tether and Circle in the global dollar market. But if Hong Kong eventually licenses USD stablecoins issued by regulated banks, that would be a direct shot at Tether's core business.

The China Question

The most interesting geopolitical dimension of Hong Kong's stablecoin push is what it means for China. Beijing maintains a comprehensive ban on cryptocurrency trading and mining on the mainland. The Chinese government has shown no signs of reversing this position. Yet Hong Kong, a Special Administrative Region of China, is aggressively building a regulatory framework for digital assets that directly contradicts Beijing's stance.

CNBC reported in February that Hong Kong is proceeding with its stablecoin plans "despite Beijing's reservations." That phrasing is diplomatic but revealing. The conventional reading is that Beijing is tolerating Hong Kong's crypto ambitions as a way to test digital asset frameworks in a controlled environment without officially endorsing them. If Hong Kong's regulated stablecoin market works well and attracts capital, Beijing has a model to study. If it creates problems, Beijing can point to the mainland's ban as vindication.

The more provocative reading is that China sees Hong Kong-issued stablecoins as a potential tool for internationalizing the yuan. If banks like HSBC and Standard Chartered eventually issue CNH-pegged stablecoins (offshore renminbi), it could create a new channel for yuan-denominated trade settlement that operates outside the traditional correspondent banking system. That's speculative for now, but the infrastructure being built in Hong Kong would make it technically possible.

The Global Regulatory Race

Hong Kong's stablecoin licensing doesn't exist in a vacuum. It's part of a global regulatory race where major financial centers are competing to set the terms for how stablecoins operate.

In the United States, the GENIUS Act has passed, establishing a federal framework for stablecoin issuance with requirements similar to Hong Kong's: 1:1 reserves, independent audits, and AML/KYC compliance. The CLARITY Act is working its way through Congress with a spring 2026 target. The U.S. approach differs from Hong Kong's in one critical way: it explicitly allows non-bank entities to issue stablecoins under a federal charter, which means companies like Circle can compete on a more level playing field with banks.

The EU's MiCA regulation has been in effect since mid-2024 and has already licensed several stablecoin issuers across Europe. Singapore has its own stablecoin framework that mirrors Hong Kong's in many respects. Japan amended its Payment Services Act to regulate stablecoins in 2023 and has been gradually expanding the scope of permitted issuers.

What makes Hong Kong's approach distinctive is the explicit involvement of major global banks from day one. Other jurisdictions have mostly licensed fintech companies and crypto-native firms first, with banks entering later. Hong Kong is doing it the other way around, starting with institutions that already have the compliance infrastructure, the balance sheets, and the government relationships to operate at scale from the first day.

What to Watch

March 24 is the date to circle. If the HKMA officially grants licenses on or around that date, watch for the specific terms: which currencies are the stablecoins pegged to, which blockchain networks will they run on, and what are the initial use cases. If HSBC and Standard Chartered launch HKD stablecoins on Ethereum and its layer-2 networks, that immediately creates real-world utility for those chains in institutional finance.

Watch Tether's response. The company has been on a global lobbying tour, and losing Asia's biggest regulated market to bank-issued competitors would be a significant strategic setback. Circle, which has positioned itself as the "compliant" stablecoin, will likely apply for a Hong Kong license of its own to compete directly.

And watch the volume. If bank-issued stablecoins in Hong Kong attract meaningful transaction volume in their first few months, it validates the thesis that regulated stablecoins can compete with Tether and USDC on their own terms. If volume stays minimal, it suggests that the crypto-native stablecoin ecosystem has a durability that regulation alone can't dislodge. Either way, the experiment starts in about a week.