Quick Breakdown
- DBS will prioritize stablecoin ecosystem development over derivatives trading under Hong Kong’s new Stablecoin Ordinance.
- Hong Kong’s stablecoin licensing framework takes effect with a list of approved issuers expected early next year.
- DBS sees stablecoins driving cross-border and trade payments, leveraging its regulated digital exchange experience in Singapore.
DBS Bank is adjusting its crypto strategy in Hong Kong as the city’s new stablecoin regulatory framework comes into force, with executives emphasizing ecosystem development over direct derivatives trading. Speaking at a financial conference, DBS Hong Kong CEO Sebastian Paredes said the bank would closely monitor market developments under the new rules while focusing on building services for stablecoin users and issuers to capture the city’s growing digital asset opportunities.
Stablecoin ordinance sets global benchmark
The Stablecoin Ordinance, which officially took effect on August 1, introduces one of the world’s most comprehensive regulatory regimes for fiat-backed digital currencies. The Hong Kong Monetary Authority (HKMA) is expected to release the first list of licensed issuers early next year, a move widely seen as critical to attracting global players. Paredes highlighted DBS’s track record from its regulated digital exchange in Singapore, covering cryptocurrencies, derivatives, tokenized assets, and bonds as a foundation for expanding stablecoin-related services. He pointed to cross-border settlements and trade finance as key use cases expected to thrive under the new framework.
Early adoption and regulatory caution
Hang Seng Bank’s outgoing CEO, Diana Cesar, who also spoke at the event, described the ordinance as a bold regulatory step but warned that stablecoin adoption remains in its early stages. She stressed that wholesale and retail applications involve different risk profiles, with retail usage demanding heightened safeguards due to its impact on individual livelihoods.
Cesar further noted that while artificial intelligence is improving efficiency and customer service across banking, it raises critical concerns around data privacy and security. She emphasised that trust remains the cornerstone of financial services, requiring banks to strike a balance between technological innovation and rigorous safeguards.
Meanwhile, Hong Kong regulators are proceeding cautiously with their stablecoin licensing regime, despite surging interest from global firms. The Hong Kong Monetary Authority (HKMA) confirmed that more than 77 companies have expressed interest in applying, although approvals will remain highly selective.
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