Hong Kong has issued its first two stablecoin licenses to British banks HSBC (HSBC) and Standard Chartered (LON: STAN).
The approvals by the Hong Kong Monetary Authority (HKMA), the territory's central bank, are the first licenses to be issued under the Stablecoins Ordinance that took effect last August.
“We look forward to the issuers launching business according to their plans, exploring growth opportunities while properly managing risks,” said the HKMA in a statement.
The HKMA noted that it assessed 36 stablecoin applications before awarding two. The Monetary Authority previously said that it would issue only a limited number of licenses.
HSBC and Standard Chartered are two of only three commercial banks authorized to print Hong Kong dollar banknotes, a system that dates to 1846.
The stablecoin licenses come with one of the world's strictest frameworks for digital money.
Under the HKMA's guidelines, licensed stablecoins can only be transferred to digital wallets whose owners have been identity-verified.
In practice, this means stablecoins in Hong Kong will likely embed compliance checks into their smart contracts, restricting transfers and making them less transferable than other digital tokens
Stablecoins are cryptocurrencies pegged to an underlying asset, typically the U.S. dollar or price of gold.
Stablecoins are currently a $310 billion U.S. asset class, and U.S. dollar-denominated tokens dominate nearly all of it.
