Hong Kong's stablecoin license is approaching: Will Asia be the first to experience the next "compliance bull market"?

In recent years, the two most common terms in the cryptocurrency space are “bull market” and “compliance.” In the past, people thought these two terms were separate: a bull market relies on sentiment, liquidity, and narrative; compliance means approval, constraints, barriers, and a slow pace. But now, Hong Kong is trying to reconnect these two terms. With the regulatory framework for stablecoin issuers in Hong Kong officially implemented on August 1, 2025, the issuance of fiat-backed stablecoins has become a licensed regulated business, and the market is genuinely starting to care about a bigger question: Will Asia lead the next round of a “compliance bull market”?

To conclude: I believe that Hong Kong’s round of stablecoin licenses may not immediately lead to a traditional comprehensive bull market, but it is likely to spark a round of “compliance asset re-evaluation.” In other words, the first to rise may not be all cryptocurrencies, but those assets and companies directly related to licenses, clearing, custody, payment, stablecoin infrastructure, and compliant trading services. This time, the core of market speculation is no longer simply about “which story is bigger,” but rather “which business can truly operate within the regulatory framework.” This is fundamentally different from past market conditions driven purely by memes, L2, and airdrop expectations. This judgment is based on the legal framework that Hong Kong has established and the public statement from the Monetary Authority regarding the “limited number of licenses and strict review process” for the first batch.

The biggest misunderstanding many have about the “Hong Kong stablecoin license” is interpreting it as a simple positive development: Hong Kong can issue stablecoins now. In fact, the situation is far more complicated. Hong Kong has not passed a symbolic policy but a comprehensive regulatory system surrounding fiat-referenced stablecoins. Under Hong Kong’s legal framework, issuing fiat-referenced stablecoins or stablecoins pegged to the Hong Kong dollar requires obtaining a license; at the same time, the related system sets clear requirements for reserve asset management, redemption arrangements, risk control, and anti-money laundering. In other words, what Hong Kong intends to do is not to “loosen stablecoins,” but to transform stablecoins from unregulated on-chain tools into regulated financial infrastructure.

Why is this important? Because stablecoins are no longer marginal tools in the cryptocurrency space. They have essentially become the “dollar layer” or “cash layer” in the entire digital asset world. From trading settlement and cross-border transfers to DeFi collateral and on-chain market-making, payment, and custody, stablecoins play the role of monetary intermediaries. The problem is that the stablecoin systems that have dominated the market in the past have mostly oscillated between regulatory gray areas in the U.S., offshore structures, on-chain credit, and centralized issuance. What Hong Kong is now trying to do is provide a clearer path in Asia: stablecoins can develop, but they must do so within the confines of licensing, reserves, auditing, anti-money laundering, and redemption rules. Once this path proves feasible, it will not only be a local policy for Hong Kong but will also become an important reference model for the compliance of digital finance throughout Asia.

What truly excites the market is not just the effectiveness of the system, but the upcoming issuance of the first batch of licenses. The CEO of the Hong Kong Monetary Authority, Eddie Yue, has publicly stated that the goal is to issue the first stablecoin issuer licenses in March 2026, and at first, only a limited number of licenses will be issued. The focus of the review is not on who shouts the loudest, but on whose application scenarios are more realistic, whose risk control systems are more mature, whose anti-money laundering mechanisms are more complete, and whose reserve asset quality is more reliable. In other words, this is not “first come, first served,” but rather “can you prove that you are qualified to become the future on-chain fiat entry point.” From a capital market perspective, the scarcity of licenses itself is a form of value. Those most likely to obtain licenses may receive valuation premiums in the next phase.

Therefore, what the market should really be asking is not “Will stablecoins become popular?” but rather “Who is qualified to become a legal stablecoin issuer and entry point?” Based on the currently available information, it is clear that Hong Kong is not just talking. As early as the sandbox phase, the Monetary Authority had disclosed participants, including JD Coin Blockchain Technology, Yuan Coin Innovation Technology, and the joint venture of Standard Chartered Bank (Hong Kong) / Animoca Brands / HKT. Subsequently, Reuters also reported that Standard Chartered Hong Kong, Animoca, and HKT have started more concrete joint ventures around the Hong Kong dollar stablecoin license. This signal is very critical: it indicates that future stablecoin competition will not only be among crypto-native projects but also involve a hybrid competition among banks, payments, technology, and Web3 infrastructure companies.

This means that the first phase of the so-called “compliance bull market” may not be reflected in cryptocurrency prices first but will be evident in license expectation assets. Simply put, those closest to obtaining licenses will rise first; those capable of handling clearing, custody, payment, compliant trading, and institutional access may be the first to be re-evaluated by the market. In the past few years, people often said, “The approval of an ETF will change Bitcoin,” but Hong Kong’s stablecoin licenses seem more like a transformation of the entire capital inflow chain itself. Because an ETF addresses the entry point for asset allocation, stablecoins address the monetary infrastructure for on-chain finance. The former allows traditional capital to purchase cryptocurrencies, while the latter enables traditional financial rules to begin integrating into the on-chain world. Compared to the former, the latter’s external industrial spillover effects may be longer-lasting and more profound. This inference stems from Hong Kong defining stablecoins as regulated financial activities and its prudent regulatory direction regarding cross-border, AML, and reserve quality.

So will Asia potentially lead the next round of market conditions as a result? I believe there is a chance, but it is important to clarify that “leading market conditions” and “leading a comprehensive bull market” are not the same thing. Hong Kong has advantages in three aspects. First, it has a clearer legal implementation speed compared to many jurisdictions, with clear regulations, implementation dates, and licensing paths. Second, it naturally connects Chinese capital, international capital, and Asian financial institutions, holding a unique position between funding and regulation. Third, it is not just discussing Web3 but is attempting to connect stablecoins, payments, custody, trading services, and traditional financial systems. As long as the first batch of licenses is issued and verifiable payment, clearing, or cross-border use cases truly emerge, the market will view Hong Kong as “Asia’s first regulatory model market for stablecoins.”

However, it is important to note that a compliance bull market never comes without costs. The repeated messages from the Hong Kong Monetary Authority are quite clear: the number of initial licenses is limited, and there will not be a flood of them; applicants need to explain their application scenarios, risk control systems, and reserve arrangements; cross-border operations also face regulatory coordination issues with other jurisdictions. In other words, Hong Kong does not intend to replicate a “stablecoin leap forward,” but will conduct small-scale pilot expansions under strict screening. This will directly lead to one result: market expectations may be very high, but those who actually obtain licenses will be few. Thus, what is most likely to emerge in the short term is not a comprehensive blossoming of fundamentals, but rather structural speculation surrounding the scarcity of licenses and imaginative potential. This is crucial for content creators and investors alike, as you must distinguish between “whether the industry trend is real” and “whether the secondary market gains have already been discounted.”

Looking deeper, the truly significant aspect of the Hong Kong stablecoin license is not just whether it will bring about market conditions, but that it may redefine one thing: the core competitiveness of the next round of the crypto market will be determined by technological leadership or regulatory leadership? In the past, a project’s success often depended on narrative, community, and liquidity; but in the future, in the fields of stablecoins, payments, and institutional finance, the factors determining success could very well be licensing, reserves, auditing, clearing partnerships, and regulatory credibility. Those who can solidify these elements will have the opportunity to reap long-term benefits. This marks a significant shift in the cryptocurrency narrative: moving from “regulatory arbitrage” to “exchanging regulation for scale.” The importance of Hong Kong’s attempt lies in its large-scale validation of this path.

Therefore, if you ask me whether Asia will lead the next round of “compliance bull market,” my answer is: There is a great opportunity to first lead a round of “compliance re-evaluation,” but a comprehensive bull market will depend on whether the real businesses that emerge after the issuance of licenses can prove themselves. If the first batch of licenses ultimately results only in news, without trading volume, payment scenarios, or clearing demands, the market’s enthusiasm will quickly wane; but if Hong Kong can truly create a closed loop for stablecoins in cross-border settlements, institutional fund transfers, and licensed trading services, then this will not just be a Hong Kong story, but very likely the starting point of a new cycle for digital finance across Asia. By that time, the market will no longer speculate on “which coin will rise,” but rather “which compliant infrastructure is becoming the financial entry point of the new era.”