Retail First: Licensed Stablecoins in Hong Kong Tokenization

Author: Jame DiBiasio

Media Entrepreneur; Chair of FinEx Club Fintech & DeFi Committee

Financial Executive Club (FinEx Club) Research Centre

Research Analyst: James Chow

Hong Kong’s stablecoin regime matters because it is now testing whether licensed stablecoins can become useful market infrastructure for a tokenization economy.

Hong Kong now has a full licensing regime for fiat-referenced stablecoin issuers, in force since August 2025, with detailed supervisory and AML/CFT guidelines. In April 2026, the Hong Kong Monetary Authority granted licenses to HSBC and to Anchorpoint under the Stablecoins Ordinance.

Other jurisdictions are taking a different approach. For example, the Monetary Authority of Singapore treats stablecoins as an opt-in on top of the Payments Services Act. In the UAE, a multiplicity of regulatory regimes exist among Abu Dhabi, Dubai, and federal authorities, but there is no unified domestic-fiat stablecoin regime.

Therefore, Hong Kong is early in explicitly linking licensed stablecoins to both retail payments and tokenized investments. The question today is whether licensed stablecoins can support real transaction flows for issuers, intermediaries, and investors, in both wholesale and retail markets.

This new market will follow two tracks. HSBC says it will begin with retail uses, and Anchorpoint with wholesale.

HSBC has said its Hong Kong dollar stablecoin will be integrated into its wallet business, PayMe, and its mobile banking app for peer-to-peer payments, merchant payments and subscriptions to tokenized investments, indicating a retail-facing strategy tied to existing distribution.

In theory, given HSBC’s size and scale in corporate banking and other activities, it is possible that the bank will explore wholesale uses for stablecoins as well. It already has a platform, Orion, for asset tokenization. It could extend PayMe stablecoin uses to external corporate clients, but in ways that are not relevant to Hong Kong-domicile stablecoin issuance; corporate uses would likely steer towards cross-border payments and flows, in which case there is no need for a Hong Kong stablecoin. Effectively, therefore, HSBC’s local stablecoin issuance will probably remain a retail function.

Anchorpoint has stated its intention to serve institutional and ecosystem use cases associated with digital asset markets, programmable finance, and tokenized asset activity. Anchorpoint is majority owned by Standard Chartered Bank, with two other investors: HKT (telco) and Animoca Brands (Web3 and gaming). The presence of telco and Web3 partners suggests Anchorpoint will also develop retail uses for its stablecoin. It is possible that the retail aspect will become more attractive sooner rather than later.

The use cases for wholesale markets are well known but the operational, commercial, and legal challenges remain considerable, even with a licensed stablecoin regime. This paper argues the retail market is misunderstood as offering stablecoin products to retail users or investors. The retail use case is perhaps even a bigger opportunity in Hong Kong than wholesale, if understood as an internal workflow rather than a product—and when considering the ongoing hurdles to wholesale adoption.

Institutional demand

Financial institutions including banks, clearing houses, custodians, exchanges, brokers, and asset managers are focused on multiple benefits of tokenization, of which stablecoins represents one type, that of tokenized cash.

These benefits include collateral mobility, programmable market infrastructure, surveillance, secondary trading, interoperability, and institutional access. Notably this does not include everyday consumer payments. Institutions have expressed interest in using stablecoins as the cash leg to allow tokenized assets to move, settle, trade, and be financed inside a compliant market structure.

The practical case for licensed stablecoins in Hong Kong is straightforward: tokenized assets need a digitally native means of payment and settlement that regulated institutions, intermediaries and investors can trust. Without that cash leg, tokenized bonds, funds, deposits, equities or collateral claims remain stuck between on-chain asset representation and off-chain money movement, which limits the efficiency gains that tokenization promises.

From an institutional perspective, tokenization as a way to wrap traditional assets, provide collateral mobility, and the ability to move liquidity across time zones and markets more efficiently, without giving up investor protections. Privacy, programmability, and interoperability are preconditions for scaling tokenized markets, especially where rights, obligations and regulatory permissions must be coded into the infrastructure rather than bolted on later.

In that environment, a licensed stablecoin is not just a crypto payment token. It can function as the settlement asset that pairs with tokenized securities, tokenized funds or tokenized collateral transactions, reducing frictions created when the asset side is on-chain but the cash side remains trapped in conventional systems. The utility case is therefore strongest where tokenization is trying to solve real market frictions: cross-time-zone settlement, intraday liquidity, fractional access, always-on trading, and programmable transfers among known participants.

Wholesale demand

Regulated institutions want digital representations of assets that can move more efficiently without abandoning traditional custody, legal ownership and post-trade safeguards. That need naturally creates demand for a trusted digital cash instrument that can settle against those assets under similar compliance expectations.

Tokenized funds already trade on virtual-asset trading platforms licensed by the Hong Kong Securities and Futures Commission, including the likes of HashKey and OSL. The next step is wider secondary trading, 24/7 access and the ability to buy those instruments with stablecoins.

Additional steps include market surveillance and compliance infrastructure. Technology companies already provide market surveillance, transaction monitoring, AML and stablecoin monitoring, including visibility into how regulator-friendly stablecoins such as Circle’s USDC moves through the ecosystem and where risks may arise in secondary distribution.

That matters because wholesale tokenization markets do not only need programmable assets and programmable cash; they also need monitoring, controls and an audit capability robust enough for regulators and institutions to tolerate greater on-chain activity.

Listed companies need visibility into who is trading tokenized versions of their securities and need a framework that preserves shareholder transparency and corporate actions. For Hong Kong, this implies that a tokenization market cannot be built only around technology vendors and trading venues; it also requires issuers to trust the infrastructure, and licensed stablecoins may help by offering a regulated, transparent medium for settlement within that environment.

Issues around secondary market trading, compliance, and corporate actions will be of immediate relevance to institutions. There may be follow-on benefits to retail participants, but this is not about consumer payments. Moreover, one of the drivers behind institutional demand for tokenization is market access. In theory this would allow the underbanked or those unable to access securities markets to trade digital assets, but this use case does not fit the Hong Kong market, where the population is almost entirely banked and enjoys market access.

Retail demand

The retail case is based on HSBC’s intended use cases. According to HSBC, its HKD stablecoin will initially support peer-to-peer transfers, merchant payments and subscriptions to tokenized investments through PayMe and the HSBC Hong Kong banking app. That matters because it moves the stablecoin discussion beyond trading venues and into everyday distribution channels with existing customers, merchant relationships and mobile interfaces.

However, users may not know PayMe is using stablecoins behind the scenes. The stablecoin will serve as an internal treasury and liquidity rail. It cannot serve as an interest-bearing product to users under HKMA regulations. Any ‘yield’ would have to be packaged as a separate, regulated product. Moreover, PayMe users do not receive a yield now, and there is no investor expectation of such from a wallet.

HSBC has stated it will use its stablecoin for peer-to-peer, peer-to-merchant, and tokenized investment subscriptions within PayMe. Whether or not the bank markets the use of tokenization, retail awareness is not required if the aim of this tool is to simply allow HSBC to facilitate transactions internally.

HSBC’s treasury department can use the stablecoin rail to move Hong Kong dollar liquidity between internal wallets (for PayMe, for merchant settlements, for corporate wallets, or for other HSBC entities) in real time, rather than relying on legacy batch rails. The treasury would also gain granular, near real-time visibility on wallet-level inflows and outflows, which it can use for intraday liquidity management.

The treasury can also harvest a modest spread on a low-risk, low-margin balance sheet item while treating the stablecoin pool as operationally constrained (due to strict HKMA asset-reserve rules) rather than as general funding. This internal return could be structured to fund loyalty points, cashback or fee discounts, rather than as interest payments.

Market fit across the value chain

For issuers, the business case rests on whether stablecoins can solve enough payment and settlement pain points to justify the cost of licensing, controls, reserve management and technology integration. HSBC appears to be pursuing scale through retail distribution and tokenized investment access, while Anchorpoint appears positioned to pursue ecosystem and wholesale applications tied to digital asset infrastructure. That suggests that the Hong Kong market may be large enough for more than one model, but not yet large enough for undifferentiated issuance.

For intermediaries, the attraction is operational efficiency and product expansion. Exchanges, brokers, custodians, wallets, tokenization platforms and payment channels all benefit when the cash leg is programmable, always available and regulated. Factors such as interoperability, surveillance, secondary market liquidity, and collateral efficiency become easier to commercialize when a licensed stablecoin can sit inside the transaction flow.

For investors, the value proposition differs by segment. Institutional users may care most about settlement certainty, collateral mobility, cross-border funding and access to tokenized securities or funds. Retail users care more about app-based payments, merchant use, faster transfers and simplified access to tokenized investments through familiar interfaces. But to whatever extent HSBC treats stablecoins as an internal tool, it has not stated how or whether it will pass on its gains to customers in the form of lower fees or stablecoin-funded rewards.

What gaps remain

There remain several questions about licensed stablecoins in Hong Kong that will only be answered as HSBC and Anchorpoint introduce their tokens.

First: Regulatory coordination beyond issuer licensing.

The HKMA regime establishes who may issue fiat-referenced stablecoins in Hong Kong and under what supervisory expectations, but a functioning tokenization industry also requires clarity for intermediaries, trading venues, custody arrangements, wallet infrastructure, tokenized securities treatment and cross-border participation. Institutions cite concerns about secondary market access, trading surveillance, global policy alignment and the ability to move collateral or assets across jurisdictions and market hours.

Second: market structure.

Many financial institutions want 24/7 trading, secondary liquidity, programmable collateral, and interoperability, but those ambitions require enough venues, counterparties, custodians, market makers and institutional workflows to create real depth. Licensed stablecoins may solve part of the cash-side problem, yet they do not automatically create liquid tokenized asset markets if the underlying products remain scarce, fragmented or operationally awkward.

Third: legal and disclosure architecture for the asset side.

Companies that issue stock need visibility and control over corporate actions. This suggests tokenized markets need enforceable legal relationships among the asset issuer, the tokenization platform, the settlement token and the end investor. Licensed stablecoins can improve trust in the payment leg, but they do not by themselves solve legal finality, beneficial ownership, disclosure duties, or claims handling across tokenized instruments.

Fourth: technical integration.

Interoperability, privacy, programmability, and the coexistence of on-chain and off-chain systems remain ongoing concerns for institutions. That suggests Hong Kong’s tokenization industry at the wholesale level will struggle unless licensed stablecoins can work across different wallets, permissioning models, tokenization protocols, bank systems, and supervisory data requirements without forcing each participant into a separate closed loop. But for the retail uses as envisaged in this paper – which are by definition closed loop activities – such integration issues are minor. This is another reason why the retail use case is likely to outpace the wholesale one, at least initially.

What this means for Hong Kong

If the retail use case can be an internal one, it is easier to pursue but invisible to the market and irrelevant to other parties. The true test of Hong Kong’s new stablecoin market may not, contrary to common belief, be about getting retail investors to ‘adopt’ stablecoins or eHKD. It is about getting wholesale usage off the ground in a meaningful way. Despite the demand among financial institutions for stablecoins as facilitators of tokenization, it is in the wholesale market where the biggest frictions remain.

It is the wholesale market that will test whether regulated stablecoins can bridge conventional finance, digital assets and tokenized capital markets more effectively than either unlicensed crypto tokens or isolated tokenization pilots.

Institutional appetite for faster settlement, collateral mobility, secondary liquidity, surveillance and programmable infrastructure is real. Licensed stablecoins can provide a trusted cash leg. What Hong Kong now needs is enough licensed money, legal clarity, market connectivity and product design to turn those needs into repeatable transaction flows for issuers, intermediaries, and investors.