Opinion: Hong Kong's first stablecoin license has been issued; the issuer is not the real winner, and someone else is truly making money.

Author: Shao Jiadian Lawyer | Mankun Blockchain Legal Services

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After much anticipation, Hong Kong’s first stablecoin issuer license has finally been granted. The first batch of licenses was not awarded to the most persuasive storytellers in the market, but to entities that best align with regulatory logic and can meet capital security and risk control requirements. This outcome is not surprising in itself. Hong Kong’s regulatory framework explicitly includes stablecoins under the “fiat-referenced stablecoin” supervision, essentially managing them as “currency-related activities.” Once in this category, who can issue becomes less a market competition issue and more a credit access issue. Under this premise, the initial licensing is more about answering a core question: in Hong Kong, who is qualified to map fiat currency on the blockchain? The answer is clear: it must be entities capable of meeting banking-level compliance and risk management standards.

Many people are accustomed to understanding stablecoins through “technological capability,” but from a regulatory perspective, the core of stablecoins has never been technology. Instead, it is about reserve asset management, redemption arrangements, and risk control capabilities. Requirements such as 100% reserves, instant redemption, and asset segregation are fundamentally mechanisms already mature within traditional finance systems. Stablecoins are simply bringing this set of mechanisms onto the blockchain. Moreover, once stablecoins are widely used, they will naturally possess “currency-like” attributes. If problems arise, the impact will not be limited to a single project but could spill over into the payment system and even the broader financial system.

Under this premise, regulators will not hand issuance rights to entities lacking a comprehensive risk control system. Therefore, this round of licensing has never been about “who understands Web3 better,” but about “who is most controllable.”

What does the first batch of licenses signify?

Breaking down this licensing process further reveals a more valuable insight: the core characteristics of the licensees are not their storytelling ability but their strong credit foundation, capital strength, compliance systems, and operational capabilities. This is not about selecting “new species,” but about choosing “those capable of building infrastructure.”

From a regulatory logic, stablecoin issuers need to meet requirements that essentially resemble a “scaled-down bank” or “deposit-taking institution.” Whether it’s 100% reserves, asset segregation, instant redemption, or anti-money laundering and risk management systems, these are not lightweight entities. More importantly, these requirements are not superficial; they must be continuously maintained during actual operations. This means issuers must not only “obtain a license” but also sustain a high-cost compliance and risk management system over the long term.

This leads to two direct outcomes. First, the entry threshold is substantially raised. The previous path of creating “pseudo-stablecoins” through structural design will be difficult to sustain under this system. As soon as a stablecoin is recognized as being aimed at the public and anchored to fiat currency, it inevitably falls within the regulatory scope. Second, issuance capacity will remain concentrated. Once entering banking-level regulation, scale effects become very apparent. Only institutions with capital strength, compliance ability, and long-term operational capacity can continue to exist at this level.

In other words, this layer is not only difficult to access but also a “heavy asset, heavy compliance” business once entered.

But more noteworthy is that the commercial attributes of this issuance layer are also being significantly diminished. Many people tend to see stablecoin issuance as a high-profit business, but structurally, this is not entirely accurate. Issuing stablecoins fundamentally depends on reserve asset yields and the marginal effects of scale. Under regulatory requirements for 100% high-liquidity reserves, the profit margin is compressed. In other words, issuing stablecoins is more like “building infrastructure” rather than a direct profit center.

From this perspective, the participation of banks or large financial institutions in issuance aligns with their usual logic: controlling infrastructure to support larger capital flows, rather than solely relying on issuance for profit. This is why, if the focus remains on “whether they can issue tokens,” it becomes less meaningful. The real market pattern is determined not by how many can issue, but by how these issued stablecoins will be used next.

The real change occurs in “how capital flows.”

If we dissect stablecoins, a crucial but often overlooked point emerges: stablecoins themselves do not create value; the real value is generated by their circulation across different scenarios. Over the past few years, USDT’s rise to prominence was not because it was “well issued,” but because it became the default settlement unit. Once an asset becomes a settlement unit, it embeds itself into nearly all transaction pathways.

Under current market structures, this “circulation” has relatively clear endpoints.

The most typical are trading and settlement scenarios. Whether on centralized exchanges or OTC markets, stablecoins are now de facto pricing benchmarks. Users buy and sell assets with stablecoins, and platforms provide matching and liquidity services, earning transaction fees. This model has been validated over time and is difficult to replace in the short term.

Secondly, cross-border capital flows. In scenarios such as corporate fund transfers, trade settlements, and personal cross-border transfers, stablecoins have become practically usable tools. Their advantages lie not in “greater compliance” but in efficiency and cost. When traditional channels involve time costs or friction, stablecoins offer an alternative pathway.

Further down, merchant payments. Especially in cross-border e-commerce and some Web3-native businesses, stablecoins are already being used as a payment method. These often involve payment service providers or OTC conversion channels, converting stablecoins into fiat currency to complete the payment cycle.

Finally, asset-related applications, i.e., RWA (Real-World Assets) directions. Once assets are on-chain, they require a stable valuation and settlement tool. Stablecoins are almost naturally suited for this purpose, whether for yield distribution or asset transfer.

Looking at these scenarios collectively reveals a commonality: stablecoins are not isolated products but embedded as “standard units” within existing financial activities.

Business division around stablecoins has already taken shape

Further dissection shows that a relatively mature business structure has formed around stablecoins, and these structures are not theoretical but operational systems.

On the asset side, custody is handled by professional custodians and licensed platforms responsible for managing user assets or related reserves. This step usually involves high compliance thresholds due to asset security and segregation concerns.

On the user side, wallet systems handle asset storage and transfer. This includes exchange-provided custody wallets and self-custody wallets controlled by users. Both modes have established stable usage habits.

At the trading level, centralized exchanges remain the primary liquidity providers, supported by market makers to maintain depth. This structure is critical in stablecoin systems because it directly affects capital flow efficiency.

In deposit and withdrawal channels, conversions between fiat and stablecoins mainly rely on OTC markets and some compliant channels. Although compliance levels vary across regions, this layer has formed relatively stable operational pathways.

These segments are not isolated but form a complete capital flow pathway. Stablecoins’ role is to connect these otherwise dispersed links. That’s why, after licensing, changes will not occur at a single point but will reshape the entire pathway.

The real watershed is not the licensing itself but the position

If we zoom out to the licensing event, what it truly changes is not “who can issue stablecoins,” but rather bringing a previously gray-area activity into a formal regulatory framework. Before, stablecoins were more of a “trial-and-error” structure. Different projects could achieve similar functions through various approaches, with regulatory boundaries being somewhat vague. Many activities evolved gradually through trial and error.

But after this licensing, the situation fundamentally changes. Issuance is explicitly included in the licensing system, with clear requirements for reserves, redemption, and fund segregation. Stablecoins are no longer products that can be arbitrarily designed; they are financial arrangements that must operate within a defined framework.

Once rules are clear, market division of labor becomes fixed. The issuance layer is confined to a very small number of entities; the circulation, settlement, and application layers built around issuance then have more room to grow. This is why, after licensing, the market will not shrink but become more layered. The real change is not about “opportunities,” but about “which layer the opportunities are in.”

In practice, this layered structure is already emerging. For example, some projects can seamlessly connect to banking and clearing channels, while others remain stuck at critical points. These differences are not only apparent after operations start but are often predetermined during initial design. Once stablecoins enter a regulatory framework, all arrangements around capital flow are scrutinized under the same logic: where does the capital come from, who processes it, and where does it go? If any link fails, the entire pathway becomes difficult to scale.

Therefore, returning to the initial question: the significance of this stablecoin licensing event is not about a particular institution but about defining a boundary. Inside this boundary are scalable pathways; outside, structures become increasingly difficult to establish. To summarize in one sentence: stablecoins have shifted from “trial-and-error products” to “foundational infrastructure that must be properly designed.” The projects that succeed will not necessarily be the most technically advanced or the earliest entrants, but those that have chosen the right position and built the right structure from the start.