Original author: Lawyer Shao Jiadian
After much anticipation, Hong Kong has finally issued its first batch of stablecoin issuer licenses. Those who received the first licenses are not necessarily the most storytellers in the market, but rather the entities that best comply with regulatory logic and are best able to meet the requirements for fund security and risk control. This outcome was not unexpected. Hong Kong's regulatory framework explicitly includes stablecoins within the "fiat-backed stablecoin" framework, essentially managing them as "currency-related activities." Once within this scope, who can issue stablecoins is no longer a matter of market competition, but rather a matter of creditworthiness. Under this premise, the issuance of the first batch of licenses is more like answering a core question: In Hong Kong, who is qualified to map fiat currency on-chain? The answer is clear: it must be an entity capable of meeting bank-level compliance and risk control requirements.
Many people are accustomed to understanding stablecoins in terms of "technical capabilities," but from a regulatory perspective, the core of stablecoins has never been technology, but rather the ability to manage reserve assets, redemption arrangements, and risk control. 100% reserves, instant redemption, and asset segregation are essentially mechanisms already well-established in the traditional financial system. Stablecoins simply bring these mechanisms onto the blockchain. Furthermore, once widely adopted, stablecoins 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 these circumstances, regulators will not entrust the issuance rights to an entity lacking a complete risk control system. Therefore, this round of licensing was not about choosing "who understands Web3 better," but rather "who is most controllable."
What does the first batch of licenses signify?
If we break down this licensing process further, we find a more valuable observation: the core characteristic of the first batch of licensed entities is not strong narrative ability, but rather strong credit foundation, financial strength, compliance system, and operational capabilities. This isn't about selecting "new species," but rather "people who can build infrastructure."
From a regulatory perspective, the requirements for stablecoin issuers are essentially close to those of a "mini-bank" or "depository-like institution." Whether it's 100% reserves, asset segregation, instant redemption, or anti-money laundering and risk control systems, these are not responsibilities that a lightweight entity can undertake. More importantly, these requirements are not merely formalities but must be consistently met in actual operations. This means that issuers not only need to obtain a license but also maintain a high-cost compliance and risk control system over the long term.
This directly leads to two results. First, the issuance threshold has been substantially raised. The path of achieving "stablecoin-like issuance" through structural design in the past is difficult to maintain under this system. As long as a stablecoin is identified as being offered to the public and pegged to fiat currency, it will inevitably fall under regulatory scrutiny. Second, issuance capacity will continue to concentrate. Because once it enters bank-level regulation, the scale effect will be very significant. Only institutions with financial strength, compliance capabilities, and long-term operational capabilities will be able to continue to exist at this level.
In other words, this level is not only difficult to enter, but even if you do get in, it is a business that is "asset-intensive and compliance-intensive".
More importantly, the commercial aspect of the issuance layer is also heavily compressed. Many people are accustomed to understanding stablecoin issuance as a high-profit business, but structurally, this is not entirely true. The issuance of stablecoins essentially relies on the returns from reserve assets and the marginal effect brought by scale. With regulatory requirements mandating 100% high-liquidity reserves, this profit margin is squeezed. In other words, issuing stablecoins is more like "infrastructure construction" than a direct profit center.
From this perspective, the participation of banks or large financial institutions in issuance aligns with their consistent logic: controlling infrastructure to absorb larger-scale capital flows, rather than simply profiting from the issuance itself. This is why focusing solely on "whether or not a coin can be issued" is no longer meaningful. What truly determines the market landscape is not how many people can issue coins, but how these issued stablecoins will be used.
The real change lies in "how the money flows".
If we break down the issue of stablecoins, we'll find a crucial but often overlooked point: stablecoins themselves don't create value; the real value comes from their circulation across different scenarios. The reason USDT was able to establish its position over the past few years wasn't because it was "well-issued," but because it became the default settlement unit. Once an asset becomes a settlement unit, it becomes embedded in almost every transaction path.
Under the current market structure, this "flow" has a relatively clear place to land.
The most typical application is in trading and settlement scenarios. Whether on centralized exchanges or over-the-counter markets, stablecoins have become the de facto pricing benchmark. Users buy and sell assets with stablecoins, and platforms provide services related to matching and liquidity, charging transaction fees in the process. This model has been proven over a long period and is unlikely to be replaced in the short term.
Secondly, there's cross-border capital flows. In scenarios involving corporate fund transfers, trade settlements, and personal cross-border transfers, stablecoins have become a viable tool. Their advantage lies not in "greater compliance," but in efficiency and cost. Where traditional channels incur time or friction costs, stablecoins offer an alternative path.
Next comes merchant payment collection. Especially in cross-border e-commerce and some Web3 native businesses, stablecoins are already being used as a payment method. This typically involves combining stablecoins with payment service providers or over-the-counter exchange channels to convert them into fiat currency, thus completing the entire payment collection loop.
Finally, there are asset-related applications, namely RWA. Once assets are on-chain, a stable pricing and settlement tool is needed. Stablecoins are almost a natural fit for this, as both profit distribution and asset transfer can be centered around stablecoins.
Looking at these scenarios together, a commonality emerges: stablecoins are not isolated products, but rather a "standard unit" embedded in existing financial activities.
A division of labor has already taken shape in the field of stablecoins.
If we break it down further, we will find that a relatively mature business structure has been formed in the market around stablecoins, and these structures are not theoretical ideas, but systems that are already in operation.
On the asset side, custody is now handled by professional custody institutions and licensed platforms, responsible for managing user assets or related reserve assets. This stage typically has high compliance requirements due to asset security and segregation.
On the user side, the wallet system serves the function of asset storage and transfer. This includes both custodial wallets provided by exchanges and self-custodial wallets where users control their own private keys. Each model has its own trade-offs, but both have established stable usage habits.
At the trading level, centralized exchanges remain the primary providers of liquidity, while market makers maintain market depth. This structure is crucial in the stablecoin system because it directly determines the efficiency of fund flows.
In the deposit and withdrawal process, the conversion between fiat currency and stablecoins mainly relies on the OTC market and some compliant channels. Although the level of compliance varies in different regions, a relatively stable operational path has been established at this level.
These links do not exist in isolation, but together they form a complete funding path. The role of stablecoins is to connect these originally separate links. This is why, after the licenses are issued, the changes will not occur at a single point, but will be reflected in the reshaping of the entire path.
The real dividing line isn't the cards dealt, but the positions.
If we shift our focus back to the issuance of these licenses themselves, what it truly changed wasn't "who can create stablecoins," but rather formally bringing something that could previously operate in a gray area into the regulated sphere. Before this, stablecoins were more of a "testable" structure. Different projects could achieve similar functions through different paths; while regulatory boundaries existed, they weren't entirely clear. Many businesses gradually took shape through trial and error.
However, this time, the situation has fundamentally changed. Issuance has been explicitly incorporated into the licensing system, and key aspects such as reserves, redemption, and fund segregation have clear requirements. Stablecoins are no longer products that can be designed arbitrarily, but rather financial arrangements that need to operate within a predetermined framework.
Once the rules are clear, the division of labor in the market is also fixed. The issuance layer is locked in the hands of a very small number of entities; while the circulation, settlement, and application layers surrounding issuance become a much larger space. This is why, after this round of licensing, the market will not shrink, but will instead become more stratified. The real change is not "whether there are opportunities," but "at which layer are the opportunities?"
In reality, this stratification is already becoming apparent. Even within the same payment system, some projects can smoothly integrate with the banking system and clearing channels, while others consistently get stuck at crucial junctures. These differences didn't arise after the business started operating; they were determined from the initial design. Once stablecoins are brought under regulatory oversight, all arrangements surrounding fund flows will be examined within the same framework: where do the funds come from, through whom, and where do they ultimately go. If any link in this chain fails, the entire path will be difficult to scale.
So let's return to the initial question. The real point of interest in this stablecoin license issuance isn't any particular institution, but rather the boundary it sets. Within that boundary lies a path that can be amplified; outside it lies a structure that becomes increasingly difficult to establish. If we had to summarize this in one sentence, it would be this: stablecoins have transformed from a "product that can be tested and failed" into an "infrastructure that must be designed correctly." The projects that succeed next may not be the most technologically advanced, nor the earliest entrants, but rather those who chose the right position and built the right structure from the outset.
