Hong Kong Stablecoin New Policy: Opportunities and Challenges for Entrepreneurs

On May 21, the Hong Kong Legislative Council passed the coin regulation bill, officially ushering in a new era of stablecoin regulation. This move sparked heated discussions in the cryptocurrency industry, with mixed reactions from various parties. Some believe that small players will lose opportunities, while others are optimistic about the emerging payment finance (PayFi) sector. However, true industry veterans remain calm, as they understand that this is only the beginning of new game rules. When large stablecoin issuance institutions begin applying for "Hong Kong identity," a wealth restructuring around the stablecoin ecosystem has only just begun.

For entrepreneurs, it is important to focus on opportunities outside the competition among giants. In this emerging market, numerous new tracks are emerging, waiting for visionary entrepreneurs to explore.

Stablecoin Issuance: A High-Threshold "Pay-to-Win Game"

First of all, it is important to clarify that if you are still considering "getting rich quickly by issuing stablecoins in Hong Kong", it is best to give up this idea as soon as possible. This field has become the "exclusive game for heavy asset players", and the specific difficulties are reflected in the following aspects:

1. Advantages of being a pioneer in regulatory sandboxes

The Hong Kong Monetary Authority's regulatory sandbox program began cultivating a group of "elite" projects two years ago, and these projects are already well-prepared in terms of system development, compliance processes, and risk control. For newcomers, this gap is difficult to bridge.

2. Strict financial requirements

The regulations require issuing institutions to have "sufficient financial resources". For example, the registered capital alone needs to be 25 million Hong Kong dollars, and they must also prove ongoing profitability. This requirement directly excludes most grassroots entrepreneurs.

3. Strict regulatory and transparency requirements

The new regulations require that reserve assets must be 100% equivalent and can only be invested in highly liquid assets. At the same time, it requires that custodians and issuers strictly separate, and audits need to be real-time and transparent. This means that every transaction is under the close scrutiny of regulation.

4. Policy Risk

Stablecoins involve monetary sovereignty, and the Hong Kong government will inevitably be very cautious when issuing licenses. Policies may be adjusted at any time, and this uncertainty poses a significant risk for small teams.

New Opportunities for Entrepreneurs: Five Core Tracks

Although the threshold for directly issuing stablecoins is high, there are still plenty of opportunities in the service areas surrounding the stablecoin ecosystem. Here are five promising tracks:

1. PayFi Infrastructure

This is the main battlefield for small and medium-sized teams, focusing on developing payment and clearing systems that support the circulation of stablecoins. Specific opportunities include:

• Cross-border payments: Providing fast and low-cost cross-border transfer services for foreign trade enterprises.
• Merchant Settlement: Providing retailers with real-time stablecoin settlement solutions.
• Multi-chain settlement: Develop cross-chain payment solutions to connect stablecoins on different public chains.

2. Compliance Service Provider

With tightening regulations, the demand for compliance services has surged. Major opportunities include:

• Anti-money laundering tools: Develop on-chain transaction monitoring and risk identification systems.
• Audit Services: Providing reserve audits for stablecoin issuers.
• Regulatory Technology (RegTech): Developing automated compliance reporting generation tools.

3. Cross-chain bridge service

The development of multi-chain ecosystems has brought about a huge demand for cross-chain solutions, especially in the fields of enterprise payments and DeFi. The focus is on developing secure, efficient, and low-cost cross-chain solutions.

4. Stablecoin Asset Management

Provide value-added services for users holding stablecoins, with main directions including:

• Access DeFi protocols: Help users earn lending interest.
• Real World Asset (RWA) investment: Development of tokenized products for traditional assets such as government bonds and real estate.

5. Reserve Asset Management

Provide professional asset management services for stablecoin issuers, including:

• Asset Custody
• Audit and Assessment
• Investment Strategies and Risk Management

Conclusion

The introduction of the Hong Kong stablecoin regulations marks a new phase in global stablecoin regulation. Although the threshold for directly issuing stablecoins is high, there are still plenty of opportunities in the various service areas surrounding the stablecoin ecosystem. Smart entrepreneurs should pay attention to these emerging niches, developing innovative services based on compliance, thereby securing a place in this rapidly evolving market.