On August 1, 2025, Hong Kong’s landmark Stablecoin Ordinance officially came into force, marking a pivotal moment in the region’s digital finance evolution. This regulatory milestone establishes a clear, compliant pathway for stablecoin issuance and trading, setting the stage for institutional-grade growth in the virtual asset ecosystem. For investors, this isn’t just regulatory news—it’s a strategic signal pointing to tangible opportunities across the value chain.
Backed by research from JPMorgan and Guosen Securities, the global stablecoin market—now surpassing $230 billion in total market capitalization—is poised for a new phase of expansion, with Hong Kong emerging as a key compliance gateway in Asia. But not all players will benefit equally. Success hinges on regulatory approval, infrastructure readiness, and access to capital and customers.
👉 Discover how regulated platforms are shaping the future of digital finance.
The $230 Billion Opportunity: Understanding the Stablecoin Landscape
Stablecoins are no longer niche tools for crypto traders. They’ve evolved into foundational assets in the global financial system, serving as digital cash equivalents that bridge traditional finance (TradFi) and decentralized finance (DeFi).
According to Guosen Securities, the market is dominated by a few major players:
- Tether (USDT): Over $150 billion in circulation.
- Circle (USDC): More than $60 billion in circulation.
Together, these two fiat-backed stablecoins account for nearly 87% of the market, both pegged 1:1 to the U.S. dollar and backed by real-world assets such as cash and short-term U.S. Treasury bonds.
JPMorgan categorizes stablecoins into four types:
- Off-chain (Fiat-Backed): Backed by reserves like USD or government securities (e.g., USDT, USDC). This is the most regulated and widely adopted model—precisely what Hong Kong’s new rules are designed to govern.
- On-chain (Crypto-Backed): Collateralized by crypto assets like Bitcoin or Ethereum (e.g., DAI).
- Commodity-Backed: Tied to physical assets like gold (e.g., Tether Gold).
- Algorithmic: Use code and incentives to maintain price stability (e.g., the now-defunct UST). These carry high risk due to lack of collateral.
For Hong Kong, the focus is squarely on off-chain, fiat-backed stablecoins, which offer transparency, stability, and alignment with financial regulation. This clarity means investors should prioritize companies positioned within this compliant segment.
How Stablecoin Issuers Generate Revenue: The “Earn While You Hold” Model
One of the most compelling aspects of stablecoin economics is the issuer’s revenue model—often described as “earning while you hold.”
Take Circle, the issuer of USDC, as a case study. In 2024, 99% of its revenue came from one source: interest earned on reserve assets.
Here’s how it works:
- When a user buys $1 worth of USDC, Circle holds that $1 in reserve.
- Over 80% of those reserves are invested in short-term U.S. Treasury funds managed by BlackRock.
- The remaining 10–20% is held in cash at globally systemically important banks.
- The interest generated from these low-risk investments flows directly to Circle as profit.
This creates a highly scalable, low-volatility business model—essentially a digital money market fund with embedded distribution.
However, Hong Kong’s regulations introduce a critical constraint: stablecoin issuers cannot pay interest directly to holders. This means the traditional “yield-bearing stablecoin” model popular in DeFi is not permitted under Hong Kong law.
As a result, investment strategies must shift. The real returns won’t come from holding stablecoins—but from investing in the issuers, custodians, and infrastructure providers that capture the yield.
👉 See how institutional investors are accessing compliant yield opportunities.
Who Wins Under Hong Kong’s New Rules? The Key Players to Watch
With the Stablecoin Ordinance now active, the race for licenses and market share has intensified. JPMorgan and Guosen Securities identify four key participant categories likely to benefit:
1. Stablecoin Issuers (The Gatekeepers)
The Hong Kong Monetary Authority (HKMA) launched a Stablecoin Issuer Sandbox in 2024. Five institutions across three consortia are frontrunners for the first wave of licenses:
- SC Digital Solutions: A joint venture by Standard Chartered, Ant Group’s ANEXT Bank, and HK Telecom, planning to launch HKDG, a Hong Kong dollar-pegged stablecoin.
- JD ChainTech: Aiming to issue JD-HKD, focused on cross-border payments and supply chain finance.
- Ondcointech: Partnering with Cobo and LianLian Global to launch HKDR, targeting DeFi and international transactions.
These issuers will control vast pools of reserve capital—making them central to the ecosystem’s financial engine.
2. Licensed Virtual Asset Trading Platforms (The Liquidity Hubs)
Exchanges are where stablecoins circulate. As of June 25, the Securities and Futures Commission (SFC) has issued 11 VATP licenses.
OSL Group, Hong Kong’s first licensed platform, offers a blueprint for profitability:
- 70.2% of revenue comes from digital asset trading fees.
- Retail trading fees range from 0.2% to 0.28%.
- Institutional fees are lower, between 0.15% and 0.225%.
- Additional income comes from SaaS solutions (24.5%).
Platforms with strong compliance frameworks and institutional access will dominate trading volume.
3. Brokerages with Crypto Integration (The Bridge Builders)
Traditional brokers face margin pressure, but digital-native firms like Futu (Moomoo) are gaining ground. Futu already offers crypto trading via partnership with HashKey and is applying for its own VATP license.
Its advantages? A massive retail user base and a tech-first platform—key assets for capturing trading fees and cross-selling financial products.
4. Infrastructure Providers (The Enablers)
Behind every successful ecosystem are the “picks and shovels” companies:
- Custodians: Zoey Bank (ZA Bank) provides custody services for Ondcointech.
- Asset Managers: Firms like BlackRock manage reserve portfolios.
- Tech Providers: Companies such as Formosa Financial and Sino-soft International offer KYC/AML, blockchain security, and payment solutions.
These enablers benefit regardless of which issuer wins—because they power the entire system.
Frequently Asked Questions (FAQ)
Q: Can I earn interest on stablecoins in Hong Kong?
A: No. Hong Kong regulations prohibit stablecoin issuers from paying interest directly to holders. Yield-generation strategies must go through licensed platforms or DeFi protocols outside Hong Kong’s jurisdiction.
Q: What types of stablecoins are allowed under the new rules?
A: The ordinance focuses on off-chain, fiat-backed stablecoins (like USDT or HKD-pegged tokens). Algorithmic or crypto-collateralized models are not the primary focus of current regulation.
Q: How do I invest in Hong Kong’s stablecoin ecosystem?
A: Focus on publicly traded companies involved in issuance (e.g., parent firms of sandbox participants), licensed exchanges (like OSL), or tech providers with SFC-compliant solutions.
Q: Is Hong Kong’s market big enough to matter globally?
A: While still smaller than U.S. volumes, Hong Kong serves as a strategic gateway between East and West. Its clear regulatory framework attracts institutional capital that may avoid less-defined markets.
Q: Who regulates stablecoins in Hong Kong?
A: The Hong Kong Monetary Authority (HKMA) oversees stablecoin issuers, while the Securities and Futures Commission (SFC) regulates trading platforms and intermediaries.
Q: When did the Stablecoin Ordinance take effect?
A: The law officially came into force on August 1, 2025, following a multi-year consultation and sandbox testing period.
Final Thoughts: Positioning for the Next Phase of Digital Finance
Hong Kong’s stablecoin regulations aren’t just about compliance—they’re about building trust, attracting capital, and enabling innovation within guardrails. The opportunity isn’t speculative; it’s structural.
Investors should look beyond short-term price movements and focus on:
- Companies with first-mover advantage in licensing.
- Platforms with proven revenue models (trading fees, SaaS, custody).
- Firms that combine technology, compliance, and customer reach.
The digital dollar era is here—and Hong Kong is positioning itself as Asia’s合规 hub for the future of money.
👉 Explore compliant platforms driving the next wave of financial innovation.