The granting of licenses to two stablecoin issuers in Hong Kong points to a conservative approach for regulators, S&P Global Ratings said in a recent release.
Regulators have chosen banks, rather than less-regulated players, to be the face of the development of stablecoins in Hong Kong, with the first licenses granted to Hong Kong and Shanghai Banking and Anchorpoint Financial, a joint venture led by Standard Chartered Bank, S&P said.
These banks will be able to offer issuance, trading, lending, investment, and payments on a single platform, gaining strong network effects and creating user stickiness, according to credit analyst Will Hay.
Stablecoins could anchor the creation of a broader digital asset market in the city given its mutual connection with tokenization, S&P said.
Wealth management could offer opportunities, with stable coin-linked products or digital assets expanding banks' product offerings and fee pools and mainland Chinese clients exploring crypto products, the rating agency said.
On the other hand, cheaper cross-border settlement options using stablecoins could be disruptive for banks, according to S&P.