On October 1, the Hong Kong Monetary Authority (HKMA) disclosed to the public that as of September 31, a total of 36 banks, tech giants, and others had submitted applications for stablecoin licenses and entered the HKMA's review process. The first batch of license holders is expected to be announced in early 2026. According to information from public channels, the number of initial license holders is expected to be small, limited to a single-digit range (referencing the Hong Kong Securities and Futures Commission's initial issuance of VATP licenses to exchanges, it would not be surprising if only one or two licenses are issued), which means that the vast majority of applicants will not be able to "leap over the dragon gate."

Today, the Sa Sister team will discuss the potential impacts of this stablecoin license application competition on the industry.

Although the HKMA disclosed that there are 36 entities entering the review process on October 1, it did not publicly release a specific list. The main reason for not disclosing the list is that the HKMA has previously emphasized: "Expressing intent or submitting an application for a stablecoin license, as well as communication between the HKMA and relevant institutions, is merely part of the application process and does not constitute approval for any institution, nor does it imply any recognition of their prospects for obtaining a license." Therefore, to avoid any misunderstanding by the public due to improper promotion by certain entities, the HKMA has chosen not to disclose the list.

Since the Hong Kong "Stablecoin Ordinance" was introduced and the application conditions were clarified, the Sa Sister team has communicated with regulatory authorities and several informants, repeatedly emphasizing in previous articles: based on the positioning of stablecoins as important financial infrastructure, only large, well-qualified financial, tech, and retail giants have a chance to "land" in the early stages of license issuance. In short, this is not a game that ordinary enterprises can play.

Now, the news released by the HKMA has indeed confirmed our speculation.

Not long ago, on September 1, the HKMA revealed that as of August this year, it had received 77 applications for stablecoin licenses, with applicants including banks, tech companies, securities/asset management/investment firms, e-commerce, payment institutions, and web3 unicorns, among others.

Now, in just a month, the number of applicants has been directly "halved" from 77 to 36. Coupled with the HKMA's earlier statement in September: "We have been arranging meetings with institutions expressing intent (to apply for stablecoin licenses) and hope that this communication will help these institutions seriously assess the necessity and maturity of their stablecoin issuance plans, thereby deciding whether to submit a formal application." It can be inferred that during the initial screening phase, the HKMA likely "discouraged" half of the applicants, including many well-known giants that initially announced their stablecoin applications with great fanfare. The intensity of competition for stablecoin licenses and the high compliance requirements are evident.

This reminds the Sa Sister team of previous market rumors that a blockchain company under a certain e-commerce giant and a digital technology company under a certain ride-hailing giant both withdrew from the first batch of license applications due to high compliance requirements and immature application timing. In hindsight, this news may not be unfounded, and taking a step back temporarily may not be a wise move. After all, sharpening the knife does not delay the work of cutting firewood; since the first batch of licenses is limited, it may be better to observe how others navigate this challenge.

As mentioned earlier, based on the HKMA's consistent cautious approach, the first batch of stablecoin licenses is confirmed to be in the single digits. So, among the many applicants, who has a better chance?

The Sa Sister team believes that the first batch of licensed institutions is likely to be large state-owned banks or a consortium of banks + retail/banks + tech giants.

From the information disclosed by the HKMA, we know that the 36 applicants for stablecoin licenses mainly consist of banks, tech giants, financial institutions, and some web3 companies. This structure aligns with market expectations for initial applicants, as the three major players in the stablecoin sandbox have already demonstrated the HKMA's selection preferences.

In fact, according to the "Stablecoin Ordinance," the application standards for Hong Kong stablecoin licenses are not particularly difficult; even a moderately capable company can meet them with some effort. The Sa Sister team summarizes the key points as follows:

If we only look at the paper strength, the Sa Sister team believes that not only the 36 applicants but also the 41 that were discouraged absolutely have the strength to meet the above requirements. However, unfortunately, many game rules are not simply written on paper.

The Sa Sister team is optimistic about banks because traditional financial institutions have a solid foundation in anti-money laundering and 24-hour security monitoring. This is mainly because stablecoins, in the eyes of regulators, are not a "product" but an important financial infrastructure related to the future of finance in Hong Kong and even China. This means that the issuance of licensed stablecoins must be primarily "compliant issuance" rather than "decentralized issuance and autonomous circulation." Therefore, tech giants like a certain e-commerce company and a certain ride-hailing company, while not lacking in technology or market presence, cannot compare to traditional financial institutions like banks in terms of financial security, especially in terms of massive, detailed KYC and anti-money laundering and counter-terrorism financing, as well as around-the-clock monitoring.

At the same time, the HKMA is essentially the "parent" of traditional financial institutions like banks, familiar with each bank and possessing a good foundation of trust. Tech giants still carry a somewhat "other people's child" vibe, making it not easy to persuade the HKMA in the short term, especially since financial security is a serious matter, and trust takes time to build.

Of course, tech giants do have "shortcuts" to quickly enter the market, and forming a consortium is a viable option. For example, the consortium of Standard Chartered Bank (Hong Kong) Limited + Animoca Brands + HKT has successfully entered the Hong Kong stablecoin sandbox for testing.

Standard Chartered needs no introduction; it is one of the three major note-issuing banks in Hong Kong and has no shortcomings in anti-money laundering compliance. HKT is a well-known telecommunications infrastructure provider in Hong Kong, covering nearly 90% of households with basic services like local phone and broadband access. Animoca Brands may be less familiar to the public; it is a company that started with IP mobile games and gained fame through early collaborations with many globally recognized IPs. It entered the Web3 chain game space around the peak of NFTs and GameFi about 20 years ago, making a significant impact. This three-in-one consortium balances financial security, market presence, technology, and user factors that regulators favor, making it unsurprising that they are the first to enter the stablecoin sandbox.

Finally, the Sa Sister team wants to clarify two concepts: stablecoin licenses and the stablecoin sandbox.

Many partners mistakenly believe that entering the stablecoin sandbox is a prerequisite for obtaining a license, or that entering the sandbox guarantees a license. In fact, both views are incorrect. The HKMA positions the sandbox as a "dialogue window between early-stage stablecoin development regulation and the market," essentially serving as a test subject. Therefore, the HKMA has made it clear that there is no direct causal relationship between the sandbox and the license; entering the sandbox does not mean obtaining a license, nor does it necessarily increase the probability of obtaining a license. Ultimately, it depends on whose final proposal can be more compliant and sustainably compliant.

Of course, the three entities in the sandbox will certainly have a first-mover advantage, as others are still in the proposal design phase while these three have already issued their tokens for testing. It is highly likely that they will secure a "license" in the future.

Related: ODDO BHF Bank launches euro-backed stablecoin EUROD

Original: “Examining Hong Kong's 36 Stablecoin License Applications: Who Will Make the Cut?”

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