Hong Kong raises $1.5 billion in July as new stablecoin rules take effect

Hong Kong has entered a new phase in digital finance with the introduction of its Stablecoin Ordinance on August 1, a move designed to establish the city as a key crypto hub in Asia. The law requires companies issuing stablecoins to obtain licences from the Hong Kong Monetary Authority (HKMA), which has set out detailed requirements covering reserves, custody, governance, and anti-money laundering controls. The regulation arrives as fintech companies in the city raised more than $1.5 billion in July, underlining strong investor interest in the digital asset ecosystem. HKMA sets licensing standards for stablecoins The HKMA has introduced strict rules for firms seeking to issue stablecoins. Applicants must ensure that tokens are fully backed by fiat currency reserves, with these reserves kept in regulated banks. The regulator has also mandated strong know-your-customer checks, governance frameworks, and real-time transparency mechanisms to strengthen oversight. Only a limited number of licences will be available, and approval will be granted cautiously. The regulator has warned that hype and speculation will not be sufficient for firms to secure licences, noting that businesses must present viable and sustainable plans. Companies that fail to meet the standards will not be permitted to offer stablecoins to the public. Stablecoin licences expected in 2026 The first batch of stablecoin issuer licences is expected early next year, later than the 2025 timeframe that was initially anticipated. Until August 31, the HKMA is holding preliminary discussions with applicants, with the official deadline for applications set for September 30. The regulator’s measured approach reflects its focus on stability and sustainability in the market. No licences have been issued so far, but the HKMA has indicated that it will maintain close engagement with interested firms as the process moves forward. Hong Kong fintechs raise capital amid regulatory shift The timing of the new regime has coincided with a fundraising surge across Hong Kong’s fintech sector. In July alone, at least 10 publicly listed firms raised a combined $1.5 billion. OSL, a major digital asset firm, secured $300 million within three days, attracting hedge funds and sovereign wealth investors. Other firms, including Dmall and SenseTime, have channelled funds into blockchain and payments initiatives. Venture-backed firms are also moving quickly; Kun, a payments startup, raised $50 million during the same period. Investments are increasingly targeting tokenised real-world assets, highlighting how stablecoins are becoming central to the evolving ecosystem. Stablecoins beyond trading and market challenges The new framework is reshaping perceptions of stablecoins in Hong Kong. They are now being positioned not just as instruments for trading, but also as tools for remittances, payments, and cross-border transfers. However, challenges remain. Hong Kong’s payments market is already highly competitive, and compliance requirements could present barriers for smaller entrants. The upfront costs of meeting licensing standards may limit opportunities for startups, raising questions about whether further adjustments will be needed to encourage innovation while keeping risks under control. If regulators succeed in balancing investor protection with room for growth, Hong Kong could play a significant role in shaping global standards for stablecoins in the years ahead. The post Hong Kong raises $1.5 billion in July as new stablecoin rules take effect appeared first on Invezz

Source: Invezz