The Great Retreat of Hong Kong Dollar Stablecoins

Strategic passivity, tactical activity. Participants in Hong Kong dollar stablecoins are waiting for a reason to get excited.

Written by: Joe Zhou, Foresight News

"We are not optimistic about Hong Kong dollar stablecoins," a person close to the regulatory authorities candidly told me. "Being optimistic about stablecoins does not mean being optimistic about Hong Kong dollar stablecoins—these are two completely different things."

He paused and added, "How can we let the institutions that are the least willing and have the least motivation lead the Hong Kong dollar stablecoin, while marginalizing the institutions that are most motivated and have the best ideas?"

This is not personal bias. I have learned from multiple participants in the Hong Kong stablecoin business that the allocation of the first two Hong Kong dollar stablecoin licenses reflects the awkwardness of this 'passive defense' regulation: Standard Chartered Bank's leading fintech company actively promoted it, while another licensed institution 'simply did not want to do it'—this has become an open secret in the industry.

At the same time, companies like Ant Group, JD Technology, and Yuan Coin Technology, which have a strong desire to explore Hong Kong dollar stablecoin scenarios, have not been able to truly enter the market or have not gained core leadership.

"Participating but not optimistic," two individuals from different institutions but close to the Hong Kong stablecoin business said almost in unison.

Currently, the situation of Hong Kong dollar stablecoins presents three subtle forms: one type of institution is optimistic about the stablecoin track but holds reservations about Hong Kong dollar stablecoins and has to 'hold a position'; another type of institution is not enthusiastic about stablecoins but is being pushed by regulators to reluctantly enter the market; and a third type of institution has the willingness, resources, and scenarios but is kept out due to their identity.

This misalignment is precisely the most authentic annotation of the 'great retreat' of Hong Kong dollar stablecoins.

One License, Two Attitudes, Three Reactions

Standard Chartered is proactive, while HSBC is passive—one license, two attitudes.

In September 2025, 36 institutions rushed to submit applications for Hong Kong dollar stablecoin licenses, creating quite a buzz. However, nearly a year later, on this day in August 2026, few people actively mention Hong Kong dollar stablecoins anymore.

As the noise subsides, only two real players remain: Standard Chartered and HSBC. A brand new business model has ultimately been handed over to institutions primarily engaged in traditional business models. Market sentiment is as cold as ice.

"HSBC's lack of enthusiasm is well known in the industry," two individuals from different licensed crypto exchanges in Hong Kong told me in unison.

On April 10, 2026, the Monetary Authority issued the first two Hong Kong dollar stablecoin licenses to Fintech Company (a joint venture of Standard Chartered Bank (Hong Kong), Hong Kong Telecommunications, and Animoca Brands) and HSBC. However, according to industry insiders, the attitudes of the two institutions towards stablecoins are completely different.

Standard Chartered has shown a certain level of initiative and is working on a global stablecoin strategy. On July 2, 2026, Standard Chartered and Circle, the issuer of USDC, jointly announced the launch of an institutional-level USDC one-stop access service. On August 12, 2026, Fintech Company initiated the first phase of the Hong Kong dollar stablecoin HKDAP issuance, which is currently only limited to distributors and professional investors such as HashKey and OSL, with plans to expand to retail users as early as the end of 2026, depending on market conditions.

HSBC, on the other hand, is in a different situation. "HSBC is passive and only does it when pointed out," an industry insider told me. Compared to Standard Chartered's proactive approach, HSBC's Hong Kong dollar stablecoin plan is clearly lagging, scheduled for the second half of 2026.

Behind this delay is HSBC's cautious consideration of the stablecoin business based on practical interests.

"HSBC is more inclined to promote tokenized deposits rather than stablecoins," a person close to HSBC revealed.

The fundamental reason is that stablecoins directly conflict with HSBC's main business. Data shows that about 85% of HSBC's payment business revenue comes from net interest income based on deposits, and payment business itself accounts for about 22% of its total revenue in 2025. HSBC's core business model is to attract low-cost deposits and earn interest spreads through loans and investments—while the issuance of stablecoins would divert bank deposits and undermine its foundation.

Moreover, the business of compliant stablecoin issuance is far from 'highly profitable': revenue is highly dependent on the interest rate environment, while profits are eroded by issuance, custody, distribution, and other channels. For HSBC, which focuses on interest rate spreads and holds massive customer deposits, actively going all in on stablecoins would erode its deposit base without generating considerable profits, lacking intrinsic commercial motivation.

In addition to Standard Chartered and HSBC, the reactions of 13 licensed crypto exchanges to Hong Kong dollar stablecoins are also quite thought-provoking.

Standard Chartered and HSBC take on the issuance role, while distribution, custody, and other aspects rely on licensed crypto exchanges such as HashKey, OSL, EXIO, and Panthertrade. However, from what I have learned, the attitudes of these exchanges can be roughly divided into three categories.

The first reaction: no expectations. "From a business perspective, there are no opportunities for institutions to profit from Hong Kong dollar stablecoins," a person from a licensed crypto exchange in Hong Kong candidly stated. "Moreover, the licensed crypto exchanges in Hong Kong are currently operating at a loss."

"No expectations," he said.

The second reaction: retreat while observing. According to my understanding, at least three licensed crypto exchanges were initially testing Hong Kong dollar stablecoins with Fintech Company, but some exchanges have begun to withdraw and are unwilling to invest too much effort into various tests.

The third reaction: tactically active, strategically observant.

"Not active strategically, but active tactically," another person from a licensed crypto exchange in Hong Kong stated. This practitioner revealed that the team is indeed actively testing cooperation with the issuer of Hong Kong dollar stablecoins, but from the overall company strategy perspective—"everyone knows this is not a business with visible profit opportunities at the moment."

Euro Panic, Yen Stupidity, Won Slowness, Hong Kong Dollar Dragging, All Running Along

The predicament of Hong Kong dollar stablecoins is not unique to Hong Kong. Broadening the perspective, non-dollar stablecoins in global financial centers are almost universally lagging behind.

Euro panic, yen stupidity, won slowness, Hong Kong dollar dragging—one winner, four laggards, each with its own difficulties.

First, let's talk about euro stablecoins, which appear to be in a state of panic as the second largest currency by storage scale, only behind the dollar.

The euro is the second largest payment currency and reserve currency in the world—SWIFT data shows that in June 2026, the euro accounted for 21.88% of global payment share, second only to the dollar; in global foreign exchange reserves, the euro accounts for about 20%, firmly in second place. A currency that occupies 22% of international trade and finance has a stablecoin that only accounts for 0.22% of the global market—an entire 100 times difference.

Watching the rapid development of dollar stablecoins, Europe is anxious and plans to launch euro stablecoins compliant with MiCA in the second half of 2026. Currently, the alliance has expanded to 37 financial institutions covering 15 European countries, including major European banks such as BNP Paribas, ING, UniCredit, Banco Santander, and Rabobank.

However, while the alliance of 37 banks looks impressive, the reality is that it is more noise than substance. The market value of euro stablecoins is only $674 million, accounting for 0.3% of the global stablecoin market. Moreover, most of this 0.3% share is occupied by a single American company. Circle's EURC holds about $430 million, dominating 64% of the entire euro stablecoin market.

"Yen stablecoins are stupid," an industry insider bluntly stated.

"It's not that the technology is lacking, but the institutional design has narrowed the path from the very beginning." He added, "There is currently no liquidity."

In June 2026, SBI Holdings officially launched JPYSC, Japan's first Ethereum-based yen stablecoin supported by a trust bank. The three major Japanese banks—Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho—also announced plans to jointly develop their own yen stablecoin, aiming to launch commercial transactions in the 2026 fiscal year. However, the problem is that Japanese regulations have boxed stablecoins into the trust bank system—issuers must be trust banks, reserve assets must be held in trust banks, and redemptions must also go through trust banks. After all this, stablecoins have become a 'digital deposit slip with shackles,' with almost no relation to the programmability of blockchain.

Japan is not incapable of producing stablecoins—it's just that what comes out is not exciting to anyone.

Korean won stablecoins are slow and stagnant. It's not that companies don't want to do it, but that regulation has not yet settled.

After the nine major card-issuing institutions completed their pilot runs, Busan Bank achieved a 100% success rate in pilot transactions on Kaia Chain, with processing times under 1 second, and Kakao and Circle have also set up their infrastructure—companies are all ready, but regulation is still at a standstill.

What are they arguing about? They are arguing about 'who gets to issue.' The Bank of Korea insists that 'banks must hold more than 51% of the shares' to issue, which has met with strong backlash from the industry, arguing that 'this is not stability, but stagnation.' Because the Korean Banking Act stipulates that banks can hold a maximum of 15% of shares in other companies—gathering 51% would require at least 4 to 5 banks to work together. This itself is adding obstacles to the market.

The Financial Services Commission's bill has been pushed from Q1 to 'the second half of the year,' and it has been delayed more than once. Time is of the essence. South Korea has seen a net outflow of stablecoins for 18 consecutive months, totaling over $1 billion—unable to issue locally, users can only exchange for dollar stablecoins to transfer out.

The 'slowness' of Korean won stablecoins is not a capability issue, but a decision-making issue.

Hong Kong dollar stablecoins, on the other hand, are waiting and dragging. Waiting for the clarity of the U.S. legislation, waiting for banks to slowly act. Market evaluation: Hong Kong dollar stablecoins had the earliest licensing, the coldest launch, with licenses but no enthusiasm.

But the bigger problem is: those with scenarios cannot get in, while those without scenarios are forced to act. Ant wants to do it, JD wants to do it, HashKey wants to do it—they have the willingness, motivation, and scenarios, but they are all kept outside. From the very beginning, Hong Kong dollar stablecoins have not been about proactive offense, but passive defense. Because others have done it, Hong Kong has to do it.

The global stablecoin market is nearly $308.3 billion, with dollar stablecoins accounting for 98%. The strength of the dollar is one reason, but the slowness of other regions is also an important reason. Meanwhile, Hong Kong dollar stablecoins have already fallen into an awkward situation.

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