The regulatory raid on stablecoin licenses has landed. How can companies bail-in during the countdown?

1. Regulatory details suddenly released, stablecoins are heading towards an era of "heavy regulation".

On August 1, 2025, the Hong Kong "Stablecoin Regulation" officially came into effect, and stablecoins were formally included under licensed supervision. Just three days before the regulation took effect, the Hong Kong Monetary Authority urgently issued two regulatory guidelines and two explanatory documents on July 29, providing the market with a clearer execution framework and regulatory details.

The released documents include two regulatory documents: "Guidelines for Licensed Stablecoin Issuers" and "Guidelines for Combating Money Laundering and Terrorist Financing", as well as two supporting explanatory materials: "Summary of the Licensing System for Stablecoin Issuers" and "Summary of Transitional Provisions for Existing Stablecoin Issuers". These documents clarify the scope of the stablecoin regime in Hong Kong, the entry requirements, transitional arrangements, and technical compliance standards, marking a move towards the practical stage of stablecoin regulation in Hong Kong.

The details that have drawn the most attention from enterprises are those related to compliance execution—such as the requirement for stablecoin issuers to complete identity verification (KYC) for every compliant holder, ensuring they do not originate from or provide stablecoin products to prohibited areas, and to adopt "reasonable technical means to identify and prevent the use of virtual private networks (VPN)". This not only sets complex firewall thresholds in practical operations but also poses numerous constraints on the expansion of stablecoins in RWA (real-world asset) scenarios. This article will focus on several changes directly related to enterprises, interpreting regulatory details, technical requirements, and the pace of transition.

2. Core requirements of the new regulations: standards significantly raised, practical operation thresholds sharply increased.

In conjunction with the "Stablecoin Regulation" announced in May 2024, this guideline clarifies the five mandatory requirements that stablecoin issuers must meet:

Capital requirements: Minimum paid-in capital of 25 million HKD;

Reserve Mechanism: 100% backed by high-quality liquid assets (such as cash, short-term government bonds), and must be held in custody and isolated, prohibited from re-pledging;

Redemption mechanism: Users can redeem at face value within 1 day;

Real-name system (KYC): User identities must be retained for at least 5 years, and anonymous wallets and DeFi protocols are explicitly prohibited;

Promotional restrictions: Unlicensed stablecoins are prohibited from public promotion or marketing, and violators will face fines and criminal liability.

Among these requirements, the capital and reserve mechanism are expected, but the following two points may have a substantial impact on small and medium-sized enterprises preparing to enter the RWA sector:

The first is the tightening of "application scenarios." Regulations clearly prohibit the access of DeFi protocols and anonymous wallets, focusing on the payment function of stablecoins rather than the financing function. This means that many project parties hoping to use stablecoins to enhance RWA liquidity may need to redesign the entire on-chain path.

The second is the raising of the threshold for "appropriate candidates." The "Guidelines" propose that independent non-executive directors must account for at least one-third of the board of directors of stablecoin license holders, almost aligning with the standards for listed companies. For small and medium-sized enterprises with limited resources, temporarily forming a compliant board structure is not only time-consuming but also challenging to implement. This reality has prompted many companies to seek external compliance and organizational consulting services.

3. Upgraded Technical Barriers: From KYC to VPN Review, issuers must become a "firewall".

In addition to the institutional barriers, regulators have put forward more specific technical compliance requirements for stablecoin issuers, especially regarding the identification and interception of user behavior:

Geographic risk identification: It is necessary to verify the user's identity documents, such as an ID card or passport, to determine their nationality and residence.

Technical identification means: It is necessary to use IP location or GPS location technology to determine whether the user is within a restricted jurisdiction;

VPN Usage Identification: It is necessary to reasonably monitor whether users are using virtual private networks to bypass geographical restrictions;

Access blocking: Technological interception of operations such as registration, downloading, and purchasing from restricted areas.

Regulators have made it clear that if a jurisdiction prohibits stablecoin trading, even if users disguise their identities using a VPN, it constitutes a violation. Stablecoin issuers are required to cut off access to these regions from the source to prevent cross-border disputes.

This means that the issuer has to take on a role not just as a financial entity, but also a role similar to a "blockchain technology firewall." This is quite a hurdle for enterprises that are not yet familiar with blockchain technology and have not established a compliance system.

More realistically, stablecoins are originally a powerful tool for cross-border payments, capable of compressing settlement cycles under the SWIFT system to seconds and significantly reducing transaction fees. However, under the multiple requirements of technology and compliance, the access capabilities of global users have also been weakened. If companies cannot meet the requirements for geographic identification and access control, it will be difficult to enter this new market defined by strict regulation.

IV. The schedule is set: the window is open, and missing it means no chance to enter.

The pace of this round of regulatory reform is tight, and the Monetary Authority has already set a clear timetable:

By October 31, 2025, existing stablecoin issuers must submit their licensing applications and related compliance evidence.

Starting from November 2025, those who have not applied, have been rejected, or have withdrawn their applications will enter the graduation period and must exit the Hong Kong market in an orderly manner.

Applicants must complete their application by January 31, 2026, to continue operations and become a licensed stablecoin institution in Hong Kong.

Moreover, the Monetary Authority will prioritize applications submitted before September 30, and plans to issue only a limited number of licenses in the first phase. This means that the stablecoin landscape in Hong Kong will enter a reshuffling phase of "fast review and issuance, slow ones out."

For enterprises, this leaves little time for operational aspects. If they plan to apply for a license themselves, they need to quickly complete a series of actions such as building an organizational structure, reviewing technical plans, and preparing compliance materials; if they intend to cooperate with a licensed entity, they must also complete model adjustments and resource integration in advance. These tasks are extremely difficult to accomplish alone, and seeking professional support will be a practical choice.

Especially for enterprises planning to utilize the Hong Kong stablecoin system for RWA financing, cross-border settlement, and DeFi access, if they do not complete their strategy restructuring within the next two months, they are likely to miss the first wave of entry bonuses and even lose the entry threshold.

Conclusion: It's time to start preparing.

The implementation of the regulatory framework for stablecoins in Hong Kong is a deep restructuring of the RWA and stablecoin sector. Regulations set thresholds and reshape the rules of the game.

For small and medium-sized enterprises to break through, they not only need to update their on-chain strategies but also must establish a complete support system for technology, compliance, and organizational governance. For the vast majority of enterprises, this is no longer an "option," but a " prerequisite for survival."

The window has opened, and the countdown is on. For companies that truly wish to participate long-term in RWA, now is the moment to make decisions and take action.