- Hong Kong has applied a license system for stablecoin issuers aiming to attract institutional ventures, while the mainland maintains strict rules that protect monetary control and prioritize the development of the e-CNY.
- This regulatory split affects capital movement, firm location choices and the development of digital financial products across the region.
Hong Kong regulatory rules
Hong Kong has a specific rule system that requires permission from the monetary regulator and additional compliance checks. The HKMA and the SFC require asset backing, robust AML/KYC checks and close oversight for issuers seeking a license, and the structure is designed to blend innovation with market safety by providing a clear framework for institutional custody and tokenized issuances, as reflected in the HKMA joint statements.
Mainland approach – e-CNY and usage limits
The central government maintains a tight stance on private cryptocurrencies and prioritizes the e-CNY as a controlled digital currency instrument. Over the past decade the PBOC has developed rules that restrict private stablecoins, impose usage limits to preserve exchange control and financial stability, and advance e-CNY trials that demonstrate a preference for a centrally managed digital money solution.
Impact on companies, investors and markets
Because of these opposing rules, many technology and financial firms consider using Hong Kong as a regulatory pathway to launch institution-backed stablecoins. A strategic shift toward jurisdictions with clear, predictable rules is underway, while activity on the mainland moves toward solutions compatible with the e-CNY framework or closed models subject to close authority oversight, shaping investor decisions and market positioning.
Risks as well as chances
The divergence between Hong Kong and the mainland can incentivize regulatory shopping and create connectivity challenges (particularly for companies), and unregulated global stablecoins could undermine monetary policy if not properly managed. At the same time, Hong Kong has an opportunity to attract compliant issuances, institutional custody services and specialized capital, while the e-CNY and regulated stablecoins could either compete with or complement the digital payments landscape if secure connections and common rules are established.
Implications for financial control and decentralization
The tension between control and openness reshapes regional financial governance: a robust state digital currency supports macroeconomic management, but high barriers may limit interoperability and decentralized innovation. Policymakers will need to balance system protection with space for innovation that respects monetary control and privacy considerations to avoid stifling beneficial technological advances.
Conclusion
The regulatory split between Hong Kong and the mainland forces market actors to choose between licensed frameworks and systems aligned with e-CNY controls. For issuers and users, jurisdictional choice will be crucial—either pursue Hong Kong’s licensed regime or adapt to the mainland’s e-CNY-centric structure—and the future evolution and technical cooperation between the systems will determine whether the region achieves operational compatibility without sacrificing monetary stability.
