Chinese firms operating in Hong Kong may soon be discouraged from participating in the city’s emerging stablecoin market, as new policy signals from Beijing begin to ripple outward. Reports from local media claim that some internal policy changes in Beijing have compelled state-owned enterprises and mainland-affiliated institutions to back away from cryptocurrency-related activities in Hong Kong. Why is China concerned? While no official ban has been issued publicly, regulators appear to be reassessing digital asset risks flagged by Chinese authorities, particularly in areas where cross-border influence could create spillover effects. Citing unnamed sources, Caixin reported that major Chinese banks and financial institutions with branches in Hong Kong have either paused or quietly shelved their plans to apply for stablecoin licenses. This includes heavyweights like the Industrial and Commercial Bank of China (ICBC), which had previously signalled intent to participate in the stablecoin licensing process under Hong Kong’s new regulatory regime. Now, some of those entities are reportedly reassessing their involvement altogether, or postponing license applications indefinitely. Behind this apparent pullback is a growing concern in Beijing about “risk transfer.” According to the reports, Hong Kong’s stablecoin ecosystem is still in its early stages, and the Chinese government may be wary of rushing into a space where oversight mechanisms are still evolving. Earlier this year, Chinese regulators ordered companies to halt publishing research on stablecoins and cancel related seminars, citing fears that stablecoins could be used in scams or illicit financial schemes. Across the globe, stablecoins are the hot new buzzword, and even Chinese giants like JD.com and Ant Group have registered entities in Hong Kong and some other jurisdictions. However, central authorities have lately become increasingly vocal about ensuring that the domestic financial system remains tightly controlled. This means that, even in Hong Kong, where digital asset policy has taken a markedly different path, firms with mainland ties may find themselves sidelined. Hong Kong pushes for stablecoins Hong Kong, however, has been moving swiftly to position itself as a global hub for regulated stablecoins. The city’s Stablecoin Ordinance , which came into effect on August 1, established a licensing framework for fiat-backed stablecoin issuers, however, the Hong Kong Monetary Authority (HKMA) has said that only a handful of licenses will be issued in the initial phase. That’s despite the fact that as many as 77 firms have shown interest in acquiring a Hong Kong stablecoin license. Among the hopefuls are major players like Standard Chartered, and reportedly even PetroChina, and the Hong Kong arms of ICBC and Bank of China, at least prior to the recent developments. But authorities have repeatedly emphasized that high-profile interest alone won’t be enough, and the licensing process is expected to be highly selective, possibly invite-only, with final approvals unlikely to be handed out before early next year. The mainland’s conflicted stance Meanwhile, in China, the relationship with stablecoins remains a bit complicated. On one hand, the central government has intensified its crackdown on any unauthorized crypto-related activity, reaffirming its long-standing ban on cryptocurrency trading and mining. State media and local financial watchdogs have warned that stablecoins could be used for fraud, capital flight, or to circumvent domestic controls. On the other hand, there are signs that policymakers are beginning to warm up to the idea, at least when it serves strategic interests. For instance, reports in late August suggested that China may be preparing to authorise yuan-backed stablecoins for the first time, specifically for enhancing international trade and increasing the global reach of the renminbi. Chinese officials are also reportedly exploring ways to deploy sovereign or bank-issued stablecoins for use in Belt and Road countries and within state-aligned regional alliances. However, the very architecture of stablecoins, particularly their potential for cross-border liquidity and decentralized storage, clashes with China’s need for financial surveillance and capital control. The post China signals caution as Hong Kong’s stablecoin licensing drive gathers pace appeared first on Invezz
