The Hong Kong Monetary Authority (HKMA) is being urged to go further in loosening restrictions on stablecoins, after granting the city’s first two licences to banks to issue the digital currency.

Bankers, venture capitalists and analysts said the long-awaited approvals – awarded to HSBC and a joint venture led by Standard Chartered – fell short of market expectations, underscoring the regulator’s cautious stance amid lingering risk concerns.

“It came as a surprise that only two licences were issued, and both to traditional banks,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International. “The market had expected the authority to issue at least three licences for stablecoin issuers from a broader range of backgrounds.”

Ng said the HKMA was prioritising risk management, even as it sought to promote financial innovation through stablecoins.

Unlike highly volatile cryptocurrencies such as bitcoin and Ethereum, stablecoins are typically pegged to fiat currencies or other reference assets, with the aim of combining the efficiency of digital assets with the stability of traditional money.

Hong Kong is among the first jurisdictions to introduce a comprehensive regulatory framework for stablecoin issuance. Its Stablecoin Ordinance – one of the world’s earliest such laws – came into effect in August last year, reinforcing the city’s ambitions to become a global digital asset hub.