On 1 August, Hong Kong’s Stablecoin Ordinance officially came into force, but related Hong Kong-listed equities failed to rally and instead fell across the board. Bright Smart Securities & Commodities Group dropped almost 20 per cent intraday, while Yunfeng Financial slid more than 16 per cent. Guotai Junan International, OSL Group and other “stablecoin-concept” names lost around 10 per cent, and Shenzhen-listed Sifang Jingchuang followed suit on the A-share market.

Short-Term Profit-Taking Sparks a Pull-Back from Highs

In the two-plus months after the Ordinance cleared the Legislative Council, investors treated “licences coming soon” as a foregone conclusion, driving many favoured names to multiply in price. When the law took effect, however, no “first batch” of licensees was announced, and with chips concentrated near record highs, capital rushed to lock in paper gains. Selling ballooned and turnover hit multi-month highs, creating a classic stampede. Even after the 1 August drop, most shares still trade well above their mid-May launch levels, but the exit of hot money turned euphoria into a nightmare overnight.

Delayed Licensing and Higher Regulatory Hurdles

What truly broke the bulls’ resolve was the double surprise of tighter rules and a pushed-back timetable. At a 29 July technical briefing, the Hong Kong Monetary Authority said the first stablecoin-issuer licences may not be issued until early 2026, with only single-digit slots available. Applicants must submit complete documents by 30 September, and incomplete filings risk being sent back for revision.

Meanwhile, the Ordinance mandates full 1-to-1 reserve backing, daily disclosure and nine compliance pillars including AML/KYC, meaning issuers must foot hefty bills for capital lock-ups, system upgrades and ongoing compliance. High costs and a long lead-time have upended the fragile “story-versus-valuation” equilibrium and forced investors to reassess profit pathways.

Shifting Focus to Licence Winners and Real-World Use Cases

The correction has let the air out of the bubble but has not extinguished Hong Kong’s ambition to become a global digital-asset hub. Stock-picking logic is pivoting from “who tells the best story” to “who is likeliest to win a licence and deliver actual adoption.” Two groups warrant close watch:

First, large tech or retail platforms with real cross-border payment or supply-chain finance scenarios already proven in sandbox trials; if they secure early regulatory backing, volume growth could beat expectations.

Second, financial institutions with strong compliance frameworks, reserve-management know-how and blockchain infrastructure—such as brokerages or banks that already hold virtual-asset-platform licences—whose balance sheets and risk controls can compress the payback period.

Until the inaugural licence list is settled, the sector will remain highly volatile: bearish news can trigger sharp sell-offs, yet any rumour of “making the cut” may ignite fresh speculation. For investors, the real battleground lies beyond today’s share-price ranges—in 2026, when licences are issued and the first stablecoins hit the market. Only if transaction volumes, payment usage and custody assets grow meaningfully will winners emerge. By then, regulatory barriers will serve both as moat and sword, accelerating industry shake-out—turning “compliance” into “use case” is the only way to secure a hard-currency foothold in the new order.