Hong Kong Expands Yuan Business as Stablecoin Push Faces Regulatory Hurdles

Hong Kong is doubling down on its offshore yuan business while its stablecoin ambitions face regulatory hurdles. During a recent Legislative Council briefing, Christopher Hui, Secretary for Financial Services and the Treasury, outlined measures to expand the city’s yuan-related financial activities. The Hong Kong Monetary Authority is in discussions with the People’s Bank of China to enhance their currency swap arrangement and plans to introduce a seven-day offshore yuan liquidity tendering facility.

Hui also announced plans for a virtual asset licensing bill later this year, following the Stablecoins Ordinance that took effect in August 2025. Two banks have already received stablecoin issuer permits, with HSBC set to launch its Hong Kong-dollar pegged “HSBC RedCoin” and Anchorpoint Financial testing its “HKDAP” token. However, progress on yuan-linked stablecoins remains stalled due to China’s strict regulations, which ban unauthorized renminbi-pegged stablecoins both onshore and offshore.

The city’s offshore yuan lending hit a record 935 billion yuan in 2025, and bond issuance reached 1 trillion yuan for the second consecutive year. Despite these advancements, the infrastructure for regulated stablecoin trading remains underdeveloped, with the Securities and Futures Commission tasked to promote such trading but little action taken so far.

Hui emphasized that Hong Kong will maintain the Hong Kong dollar’s peg to the US dollar and avoid switching to a yuan-linked or floating rate. The government also plans to introduce an amendment bill this year to establish a licensing regime for virtual-asset trading, custody, advisory, and management services, signaling ongoing efforts to balance innovation with regulatory oversight.