How Hong Kong stablecoin licences enforce redemption at par

"The granting of stablecoin issuer licences is an important milestone for the development of digital assets in Hong Kong." Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), said that on April 10, 2026. Two of 36 applications filed by September 30, 2025 were granted that day under the Stablecoins Ordinance (Cap. 656).

A specified stablecoin, in the HKMA's Explanatory Note on Licensing of Stablecoin Issuers of July 2025, is a fiat-referenced coin. It purports to keep a stable value wholly against one or more official currencies. The licence is permission to issue that coin in Hong Kong in the course of business. The holder is owed par, in the reference currency, from a reserve pool whose market value must stay at least equal to the coins still out.

"The regulatory regime provides an orderly operating environment for stablecoin issuers to apply innovative technologies while ensuring robust user protection and effective risk management, which will foster the development of a healthy, responsible, and sustainable stablecoin ecosystem."

Eddie Yue, Chief Executive, Hong Kong Monetary Authority (HKMA, April 10, 2026)

When issuing a fiat coin becomes a licensed activity

Section 5, as the July 2025 note restates it, draws three lines. Issuing a specified stablecoin in Hong Kong is regulated when it is done in the course of business. So is issuing outside Hong Kong a coin that tracks the Hong Kong dollar. Section 5(4) lets the HKMA name a further activity. Without a licence or a section 13 exemption, section 8 makes that an offence.

Holding out is its own test. A pitch for an activity Hong Kong would regulate counts, wherever it is made. A Chinese-language site is one factor and a Hong Kong domain is another. None is conclusive. The same test covers an offer under section 6.

A coin is typically issued when it is first recorded on a distributed ledger and assigned to a wallet. Whether that was in Hong Kong is a holistic call. The note looks at day-to-day management and at the place of incorporation. It also looks at where minting and burning occur. Where reserves are managed is a further factor, as is the location of the bank accounts that take mint and redemption cash. No single factor decides it. A server outside the city is not an exit if management, reserves and those accounts are in Hong Kong.

"The Ordinance adheres to the ‘same activity, same risks, same regulation’ principle, with a focus on a risk-based approach to promote a robust regulatory environment. This is not only in line with international regulatory requirements, but also lays a solid foundation for Hong Kong’s virtual asset market, which, in turn, promotes the sustainable development of the industry, protects users’ rights and interests, and strengthens Hong Kong’s status as an international financial centre."

Christopher Hui, Secretary for Financial Services and the Treasury, Hong Kong Special Administrative Region Government (HKMA, May 21, 2025)

Hui spoke on May 21, 2025, the day the Legislative Council passed the bill. The regime took effect on August 1, 2025. On July 29, 2025 the HKMA said the guidelines would be gazetted with that start. It also said that no licence had been issued, and that holders of unlicensed stablecoins are at their own risk. Falsely claiming to be a licensee, or an applicant, is an offence. Section 13 allows an exemption only where risks to holders and to the monetary or financial system are immaterial. The HKMA may cap how widely an exempt coin circulates.

The reserve pool, the bid price and the missing buffer

Full backing is a market-value test, not a stack of banknotes. Paragraph 2.2.1 of the August 2025 guideline quotes Schedule 2, section 5(2). For each type of coin, the pool's market value must at all times at least equal the par of that type still out. Frozen coins still count. Paragraph 2.2.3 keeps them fully backed, because a later unfreezing still has to be redeemed.

A licensee must keep, for each type of specified stablecoin, a reserve pool whose market value is at all times at least equal to the par value of that type still in circulation. Two issuer licences granted on April 10, 2026 import that test. The August 2025 Guideline on Supervision of Licensed Stablecoin Issuers states the rule as section 5(2) of Schedule 2. Take HK$10 million of one coin outstanding at par, backed by bills the guideline allows out to one year. Market value is the bid price. At a bid of 98 per 100, HK$10 million divided by 0.98 equals HK$10.204 million of face value, the amount that restores the floor. Three-month deposits skip the haircut, because they already stand at par. The guideline also asks for an over-collateralisation buffer above par, sized to asset risk, and it never states that buffer as a percentage. The floor is par. The cushion is not a number in the ordinance.

Eligible assets are a closed list, plus whatever else the HKMA accepts. Paragraph 2.3.1 allows cash and deposits of no longer than three months. Public-sector debt can sit in the pool when residual maturity is no longer than one year and the paper is highly liquid. It needs a 0% risk weight under sections 55 to 58 of the Banking (Capital) Rules, or denomination in the issuer's domestic currency. A financial institution's own debt is out, unless that institution is a public-sector bank. Overnight reverse repos on the allowed securities are in, as are funds built only for this list. A tokenised copy qualifies only when the issuer shows it is still liquid.

Currency match is the default. Section 5(3) of Schedule 2 keeps each pool in the coin's reference asset unless the HKMA approves a mismatch in writing. A Hong Kong dollar coin is backed in Hong Kong dollars, in its own pool, off the issuer's other balance sheet. A trustee or a declaration of trust does that job. A legal opinion goes to the HKMA before the trust is used. The custodian should be a licensed bank, or another arrangement the HKMA accepts, and the licensee stays responsible for that custodian. Fees must not come out of the reserve accounts. Coupons belong to the issuer. Excess above the issuer's target can leave under a written trigger.

One business day, counted from a valid request

Schedule 2, section 6, gives every holder redemption at par. Paragraph 3.3.1 adds two insolvency rights. Holders may direct a pro rata sale of that type's pool. They may claim any shortfall from the licensee if the proceeds miss par. Those rights have to be exercisable in insolvency. A legal opinion that they exist is filed with the HKMA.

Onboarding time does not count toward the one-business-day redemption the guideline sets. The consultation conclusions published on July 29, 2025 say a valid request comes from a holder who already meets the licensee's conditions, and that time spent meeting them sits outside the one business day. Paragraph 3.3.3 says that, unless the HKMA approves otherwise, a valid request is processed within one business day after the day it is received, without an unreasonable fee or an unduly burdensome condition. The cash paid is par, in the reference currency, minus a fee that passes that test. An open money-laundering concern can invalidate the request. The conditions must still be reasonable. Successful onboarding is the example the conclusions give. A first email is not a same-day cash call, and a new holder should not expect funds on the next business day after writing in.

Business day is defined locally. The guideline drops Saturdays and general holidays under the General Holidays Ordinance (Cap. 149). It also drops a gale warning day or a black rainstorm warning day under section 71(2) of the Interpretation and General Clauses Ordinance (Cap. 1). A redemption is not late because a rainstorm warning removed a calendar day.

If Friday's bid-price mark met par and Monday's sales clear below it, the gap is a claim on the company, not a payment from the Exchange Fund. The trust opinion is not a public backstop. How Bitcoin ETF creations work is a different right: that shareholder does not redeem coins from the custodian. Here the claim stops at the issuer.

Two licensees, and a register that has not grown

Section 21's register is the public list. Read on October 20, 2026, the Register of Licensees still showed two names, and its own revision line still said April 23, 2026. Anchorpoint Financial Limited, FRS01, effective April 10, 2026, gives 6/F, Standard Chartered Building, 4–4A Des Voeux Road Central. The Hongkong and Shanghai Banking Corporation Limited (HSBC), FRS02, same day, gives 1 Queen's Road Central. The inSight of April 10, 2026 calls Anchorpoint a joint venture of Standard Chartered Bank (Hong Kong) Limited, HKT Limited and Animoca Brands Limited.

Two divided by 36 is 0.0556, or 5.6% to one decimal place. Those 36 were in by September 30, 2025. Both licensees plan Hong Kong dollar coins first. On their plans, the HKMA expected launches from mid-2026 into the second half. That is a plan, not a float. The register shows none.

Later applications face the same tests. The inSight calls the timing open yet prudent, with no fixed inclination, and says that if more licences come the number will stay very limited. A 5.6% pass rate is a filter. Thirty-four applications stayed applications.

Capital is a different split. Paragraph 5.1.1 sets paid-up share capital of at least HK$25 million, or the equivalent in a freely convertible currency, or other resources the HKMA approves. That money stays inside the licensed business. Paragraph 5.1.3 turns the floor off for an authorized institution, which then follows the Banking Ordinance (Cap. 155). Anchorpoint is the joint-venture company on FRS01. HSBC is the bank named on FRS02. Section 17 can still set a higher figure. HK$25 million is a minimum in the schedule, not a filing the register displays.

Being named proves a section 15(1) licence. It does not prove that a weekly reserve page has been published. An auditor's signature is a separate question, and so is whether any coin has left testing. Six months after April 10, 2026, the register's revision date was still April 23. A name absent from that list is the case the July 29, 2025 notice flagged when the list was empty.

Interest, insolvency and the risk that stays with the holder

Exclusion is why the coin is not a deposit. The July 2025 note, restating section 3, drops central-bank tokens, government tokens and limited-purpose tokens. Anything Cap. 571 already treats as a security is out, as is a float or a deposit under another ordinance. What remains in scope is a fiat-referenced coin. The licence does not make a bank deposit into a protected coin.

Paragraph 2.6.1 bars interest on the coins, including interest someone else pays with the licensee's permission. Interest means a return held out as likely to arise from the holding. The link can be how long the coin is kept. It can instead be par, or the market level of the coin. Marketing that is not interest may remain. Coupons and losses on the reserve belong to the issuer, not the holder. Redemption pays par in the reference currency. A yield for sitting still either misses that definition or breaches section 15 of Schedule 2.

Reporting is regular and still gappy. Daily figures on par and on the reserve sit ready for the HKMA. Weekly, unless agreed otherwise, they also go on the website. An auditor checks the period's last business day and one random day. The report is due within one month and is published. Two days are not this morning.

Full backing, on those terms, is a bid-price comparison with par on the days someone measured. It does not make the HKMA the debtor. It does not hand the holder the coupon. A sale that clears under par is the licensee's shortfall. Europe's treatment of a large fiat coin is a different statute, set out in the EBA's classification of USDC. Hong Kong leaves licensing and supervision with one authority. Other custody and market-structure pieces sit on the digital assets desk.

Frequently asked questions

Can a pool that is allowed to hold government debt out to one year, marked at the bid, meet a cluster of valid redemptions inside one business day without the market value falling through par before the cash arrives? The ordinance sets the floor and then stops. It does not force the pool into overnight cash. It publishes no over-collateralisation percentage a holder can subtract from the weekly file. The cushion shows up only when that file, and the auditor's two snapshot days, are specific enough to recompute. Until then the licence names who must pay. It does not show that the sale will clear at par.

This article is informational analysis only and is not financial advice. Figures are as attributed in the text.