SS #71 - Hong Kong Sets March Launch for Stablecoin Licensing

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Good morning!

We start today in Hong Kong, one of Asia’s primary economic hubs. The Hong Kong Monetary Authority (HKMA) has announced it will issue its first batch of stablecoin licenses this March, marking a formal shift from a voluntary sandbox to a mandatory regulatory framework. To maintain strict stability standards, the HKMA noted that only a select few applicants will be approved in this initial wave.

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In Today's Edition:

• Headline: Hong Kong Sets March Launch for Stablecoin Licensing

• Quick Bites: Opera Shares Jump 18% After Minipay Adds Tether’s USDT Stablecoin

• Yield of the Week: 11.24% APY on Upshift

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HEADLINE

State of play: The Hong Kong Monetary Authority (HKMA) will grant its first batch of stablecoin issuer licenses in March 2026, marking a pivotal transition from a voluntary sandbox to a mandatory regulatory framework.

• Only a "very small number" of applicants will be approved in the first wave to ensure high standards of stability.

• Requirements include local incorporation, a minimum paid-up capital of HK$25M, and 100% backing by high-quality liquid reserves.

• Licensed issuers must guarantee redemption at par, typically within one business day, with a strict prohibition on paying interest to users.

What’s Next: Expect the first cohort of licensed issuers to consist of established banks and high-profile fintech firms rather than crypto-native startups. This will likely trigger a "flight to quality," where retail and institutional users in Asia migrate away from unregulated stablecoins toward HKMA-licensed assets for local settlements and cross-border trade.

Why it Matters: This move legitimizes stablecoins as a regulated payment instrument in a major global financial hub, bridging the gap between traditional banking and Web3. By providing a clear legal status and strict reserve requirements, Hong Kong is positioning itself to lead the next generation of digital FX and programmable payments in the APAC region.

Our Take: The "quality over quantity" approach by the HKMA is the right move to avoid a Terra-style collapse in the local market. For investors and developers, this creates a significant opportunity to build institutional-grade DeFi products on top of "trusted" fiat-backed tokens. However, the high capital requirements and prohibition on yielding interest may challenge the profitability of smaller issuers, likely consolidating the market around a few dominant, highly-regulated players.

QUICK BITES

• Ripple secures full EU EMI license in Luxembourg.

• Ark Invest buys the dip in Circle, Bitmine, Bullish shares.

• Opera shares jump 18% after MiniPay adds Tether’s USDT stablecoin.

• UAE Sheikh secretly acquired 49% of Trump's World Liberty Financial.

• Tether rakes in over $10B net profit in 2025 as excess reserves top $6.3B.

• Visa and Mastercard aren’t buying the stablecoin hype for everyday payments.

• New York Attorney General Letitia James slams stablecoin law GENIUS citing consumer protection concerns.

YIELD OF THE WEEK

Upshift USDC: 11.24% APY

• Upshift USDC vault generates returns by lending USDC to overcollateralized institutional borrowers via August, with any unlent capital deployed into secondary protocols like Morpho, Euler, and Pendle.

• While yield is typically realized over a 30-day cycle tied to borrower repayment schedules, the vault maintains a 24-hour withdrawal window for liquidity.

• The strategy operates with a 0% performance fee, though users are encouraged to maintain their deposits for at least one month to fully capture the monthly interest.

Neutrl sNUSD: 10.31% APY

• Staking NUSD for sNUSD grants users a proportional share of the yield-bearing vault, where returns are reflected through the token’s automatic price appreciation rather than manual distributions.

• Upon unstaking, sNUSD tokens are burned to return the equivalent value in NUSD to the user, calculated based on the updated exchange rate at the time of exit.

• The protocol requires users to complete a 10-day cooldown period following an unstaking request before their assets can be fully withdrawn.

Accountable sUSN Delta Neutral Yield Vault: 9.75% APY

• Noon generates returns by distributing capital across various delta-neutral strategies, converting user-deposited USDC into sUSN (staked USN) via the naccUSDC vault on YieldApp.

• The protocol is designed to provide high through-cycle returns while utilizing a tokenomics model intended to support the long-term utility of its governance token.

• The platform is exclusively available on the Monad network and requires a minimum initial deposit of $100.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.