What happened when Guotai Junan and three other Chinese institutions "withdrew" their applications for stablecoin in Hong Kong?

Against the backdrop of the booming global Crypto Assets market, Hong Kong, as an Asian financial center, was initially expected to lead a wave of innovation in the stablecoin and RWA (Real World Assets) sectors. However, a sudden market cooling is taking place. According to reliable sources, at least four financial institutions with Chinese backgrounds, including Guotai Junan International, have recently withdrawn their applications for stablecoin licenses in Hong Kong or postponed their attempts in the RWA sector, marking the arrival of the first exits in this highly anticipated financial innovation field.

Chinese financial institutions collectively withdraw: Strategic adjustments under regulatory guidance

According to executives close to Hong Kong Financial Institutions, Morgan revealed that some Chinese banks have received clear guidance from regulators regarding the stablecoin sector, requiring them to adopt a more cautious strategy. This guidance came rather suddenly, causing several institutions that were originally planning to actively enter the market to pause their plans.

The Hong Kong Monetary Authority previously set two key deadlines for market participants: expressions of intent must be made by August 31, and formal applications must be submitted by September 30. This means that institutions that fail to submit their applications by the deadline will miss the issuance window for the first batch of stablecoin licenses.

In the RWA sector, the situation is similarly surprising. An industry professional close to a Chinese brokerage, Lee, revealed that several institutions, including Guotai Junan International, have already suspended their RWA-related operations in Hong Kong, while another Chinese brokerage that has already been listed on the A-share market has also received a similar notice, being asked to stop its attempts at RWA in Hong Kong.

Regulatory Cooling: A Change in Attitude Overnight

Before and after the official implementation of the Hong Kong stablecoin regulations, the market has begun to show obvious signs of cooling down. According to industry insiders, regulatory authorities in Mainland China have conveyed three core guiding opinions to financial institutions:

Prohibition of domestic operations: Chinese institutions involved in Hong Kong's Crypto Assets business are not allowed to conduct related operations domestically and must exercise caution when participating in the virtual asset sector.

Prevent capital outflow: Strictly prohibit mainland funds from flooding into the Hong Kong crypto market.

Strengthen Compliance Responsibilities: The parent company behind Chinese Financial Institutions must bear the compliance responsibilities related to their business.

This attitude shift almost happened overnight. At the beginning of August, several Financial Institutions and internet companies were still actively announcing their applications for stablecoin licenses and vigorously entering the RWA track. However, shortly after, all institutions involved in Hong Kong stablecoins suddenly canceled external interviews and all public discussions regarding stablecoins.

On August 1, 2025, Hong Kong officially implemented the "Stablecoin Ordinance," establishing the world's first comprehensive regulatory legal framework for stablecoins. Just days before the ordinance came into effect, a set of guidelines was quietly distributed to various financial institutions, requiring them to maintain a low profile in their business and communications related to stablecoins, avoiding excessive promotion or creating public opinion hotspots.

Global Comparison: The Crypto Market in the US and Europe Heats Up, Hong Kong Moves Cautiously Forward

In stark contrast to Hong Kong's cautious approach, the crypto market in other major global financial centers is in a full-blown warming phase:

On September 25, nine major banks in Europe announced a collaboration to launch a euro stablecoin governed by the European Union's Markets in Crypto Assets Regulation (MiCA), clearly stating that this would provide a genuine European alternative to the US-dominated stablecoin market and help enhance Europe's strategic autonomy in the payments sector. This stablecoin is expected to be issued for the first time in the second half of 2026.

The U.S. market is flourishing comprehensively, from exchanges, ETFs, stablecoins, RWA to DAT (Digital Asset Trust Company), the hotspots of the U.S. crypto market have never ceased. For example, the largest U.S. online broker, Robinhood, is trying to launch stock RWAs, tokenizing private equity from well-known companies like SpaceX and OpenAI, allowing ordinary retail investors to purchase tokens equivalent to equity in unlisted companies.

Current Status and Prospects of Hong Kong Stablecoin and RWA

Despite facing challenges from the exit of Chinese institutions, Hong Kong's stablecoin and RWA markets are still developing in an orderly manner. According to the latest statement from Hong Kong's Financial Secretary, Paul Chan, the application for compliant stablecoin licenses is progressing as planned, with the first batch of licenses expected to be issued in early 2026 according to the original timetable.

The RWA market in Hong Kong has been piloting in the primary market for over two years, with about thirty to forty projects currently running, most of which have a scale of around ten to twenty million HKD. Morgan stated: "In theory, the secondary market for RWA in Hong Kong is feasible, and there may even be institutions that have already applied for it."

Hong Kong's Stablecoin Issuer Sandbox officially launched on March 12, 2024, and has been operating for about a year and a half. After the Hong Kong stablecoin licensing regulations came into effect, the Monetary Authority received 77 applications for stablecoin licenses in August. Industry insiders predict that the first batch of stablecoin licenses will be issued by the end of the year or early next year.

License Issuance Rhythm: May Replay VATP Model

The issuance pace of stablecoin licenses in Hong Kong may replicate the previous issuance model of cryptocurrency exchange licenses (VATP) in Hong Kong. Looking back at history, there were only one or two institutions that were granted the first batch of VATP licenses, while the second batch received licenses for seven or eight institutions.

A knowledgeable source revealed that several cryptocurrency exchanges, including Futu and Victory Securities, will officially operate in Hong Kong by the end of the year. The first batch of companies that obtained the VASP license has been over two years ago.

Outsiders and Insiders: Risks and Opportunities Coexist

There are too many niche tracks to participate in the Crypto Assets field, which has led to a continuous influx of numerous Financial Institutions and internet companies.

VASP License: Attracted brokerage firms such as Futu Securities, Tiger Brokers, and Victory Securities.

Bitcoin and Ethereum Spot ETF: Attracted wealth management institutions such as Huaxia Fund and Bosera Fund.

stablecoin: attracted banks such as Bank of China International and Standard Chartered Bank

DAT: Attracted Hong Kong listed companies such as Yunfeng Financial to include Crypto Assets in their balance sheets.

It is worth noting that "Jack Ma's cryptocurrency concept stock" Yunfeng Financial purchased a total of 10,000 ETH in the public market on September 2, and stated that in addition to Ethereum, it plans to explore including diversified mainstream digital assets such as BTC and SOL into the company's strategic reserve assets in the future. Over the past month, Yunfeng Financial's stock has risen by as much as 65.09%.

Hong Kong Regulatory Positioning: Balancing Three Aspects

In a recent interview, Hong Kong's Financial Secretary Paul Chan emphasized that Hong Kong's regulatory positioning is very clear, aiming to achieve a balance in three areas: innovation, integration into the real economy, and risk management. The first implementation will be the Hong Kong dollar stablecoin.

Regarding the possibility of issuing Renminbi stablecoins in Hong Kong, Xu Zhengyu stated that from the perspective of Hong Kong, the legal framework allows for different fiat currencies to serve as the underlying benchmarks for stablecoins. However, currencies carry sovereign intent and there are strategic considerations. Tying to the Renminbi must take into account the national exchange rate and monetary policy, requiring a comprehensive assessment of the risks and benefits involved.

In addition, the Hong Kong Inland Revenue Department has clearly stated that the buying, selling, or transferring of tokenized ETF shares or units on licensed digital asset trading platforms or other platforms in Hong Kong will be exempt from stamp duty, and this policy will further promote market development.

Conclusion: A temporary cooling does not mean a long-term stagnation

The cooling of the crypto market in Hong Kong happened overnight. Similarly, the local warming and sudden rise of the crypto market in Hong Kong may also come in an instant. Just as the internet has transformed the financial industry, in the future, almost all brokerages may become crypto brokerages, and all banks may also get involved in crypto business.

The integration of Crypto Assets and traditional finance may lead to a future of deep and boundless possibilities. The first entrants, while bearing the highest risks, also have the opportunity to reap the greatest rewards. A temporary exit does not mean a permanent loss; market adjustments may be precisely for healthier and more sustainable long-term development.