Key Takeaways
- A stablecoin is not a bank deposit, even when a bank issues it. HSBC states that RedCoin is not protected by Hong Kong's Deposit Protection Scheme.
- A licensed Hong Kong stablecoin must be fully backed by high-quality reserve assets held apart from the issuer's own money, and you have the right to redeem it at face value.
- Only issuers on the HKMA's public register may issue stablecoins in Hong Kong. Check the register before you buy, receive or accept any token.
- Most stablecoin scams copy a real name. Verify on the HKMA and SFC lists, and call the Anti-Scam Helpline 18222 if in doubt.
You opened PayMe and saw a new balance called HSBC RedCoin. Three questions come first, so here are the short answers.
- Is it safe? A licensed stablecoin must be fully backed by reserves and redeemable at face value, but it still carries risk.
- Is it a deposit? No. It is not covered by the Deposit Protection Scheme.
- What if the issuer fails? The reserves are held separately for holders, and you keep a legal claim to be paid back at face value.
What is a stablecoin?
A stablecoin is a digital token, recorded on a blockchain or similar shared ledger, that is designed to keep a steady value against a real currency such as the Hong Kong dollar. In Hong Kong, a licensed issuer must hold enough reserve assets to repay every coin at face value.
Think of it as an Octopus card balance that can travel. You top up HK$100, you get 100 coins, and you can spend or send them.
The difference: an Octopus balance stays inside one company's system, while a stablecoin moves on a blockchain, a shared digital record book that many computers keep in sync. A licensed stablecoin also gives you a legal right to swap it back into Hong Kong dollars at face value.
How does a stablecoin work?
A stablecoin works in four steps: you pay cash to the issuer, the issuer creates matching coins and parks the cash in a reserve, you spend or transfer the coins on a ledger, and when you redeem, the issuer destroys the coins and returns your money at face value.
The life of one Hong Kong dollar stablecoin
- 1. Minting. You convert HK$1,000 in your wallet app. The issuer creates 1,000 coins. "Minting" simply means creating new coins.
- 2. Reserving. The issuer places at least HK$1,000 of cash or high-quality, easy-to-sell assets into a separate pool held for coin holders.
- 3. Moving. You pay a shop or a friend. The ledger records that the coins moved from your wallet to theirs, usually within seconds.
- 4. Redeeming and burning. Someone hands coins back to the issuer and receives Hong Kong dollars. The issuer "burns", or permanently deletes, those coins so the reserve and the coins stay in balance.
What types of stablecoins are there?
There are three main types: fiat-backed coins supported by cash and government bonds, crypto-backed coins supported by other cryptocurrencies, and algorithmic coins that try to hold their price with code alone. Hong Kong's licensing regime covers coins that reference an official currency, and it requires full backing with high-quality reserves.
- Fiat-backed (e.g. HSBC RedCoin): simple to audit, but you rely on the issuer and its custodian.
- Crypto-backed: no single company in charge, but the collateral itself can crash.
- Algorithmic: no reserves at all, and history shows they can collapse within days.
USDT and USDC are fiat-backed but not issued under a Hong Kong licence, so they are not on the HKMA register.
What can you use a stablecoin for in Hong Kong?
Today, Hong Kong residents can use a licensed Hong Kong dollar stablecoin mainly to send money to people and pay merchants through existing apps. Banks also plan to let customers use stablecoins to buy tokenised investment products, and businesses are testing them for faster cross-border settlement.
Hong Kong latest (updated November 2026)
- 10 April 2026: the HKMA granted the first two stablecoin issuer licences, to Anchorpoint Financial Limited and The Hongkong and Shanghai Banking Corporation Limited (HKMA register, last revised 23 April 2026).
- 12 August 2026: Anchorpoint, a Standard Chartered-led venture, reportedly began a phased rollout of its HKDAP coin to institutional distributors and professional investors, not yet to the general public (The Block).
- 23 October 2026: HSBC RedCoin reportedly began rolling out on PayMe in phases (SCMP). According to HSBC, you can transfer it to people and pay merchants that accept PayMe; use in the HSBC HK App and tokenised investments are marked "coming soon".
How does Hong Kong regulate stablecoins?
Hong Kong regulates stablecoins under the Stablecoins Ordinance (Cap. 656), in force since 1 August 2025. Anyone issuing a Hong Kong dollar stablecoin, or a stablecoin in Hong Kong, needs an HKMA licence. Licensees must keep full, segregated reserves, honour redemptions at face value and publish regular disclosures.
- Licence first. Only firms on the HKMA Register of Licensed Stablecoin Issuers may carry on the regulated activity.
- Full backing. Reserve assets must be worth at least the face value of all coins in circulation, at all times.
- Segregation. Reserves are kept in a separate pool, under trust arrangements, apart from the issuer's own assets, and held by qualified custodians.
- Redemption. Holders have the right to redeem at face value. The detailed timing and any fees are set out in each issuer's terms, such as HSBC's RedCoin terms.
Trading platforms are a separate matter. The Securities and Futures Commission (SFC) licenses virtual asset trading platforms and publishes lists of licensed and suspicious platforms.
What happens if a stablecoin issuer runs into trouble?
If a licensed issuer fails, the Deposit Protection Scheme does not pay you, because a stablecoin is not a deposit. Instead, the segregated reserve pool exists to repay holders, and the rules keep your right to redeem at face value and to claim for any shortfall, even if the issuer becomes insolvent.
- Deposit protection: HSBC states plainly that RedCoin "is NOT a protected deposit and is NOT protected by the Deposit Protection Scheme". See what the scheme does cover at the Hong Kong Deposit Protection Board.
- Issuer failure: reserves sit in a separate pool for holders, not mixed with the issuer's own money, so creditors of the issuer should not be able to take them first.
- Redemption timing and fees: read the issuer's terms and conditions before you convert. They tell you how fast a redemption is paid and whether any charge applies.
What are the risks and common stablecoin scams?
The main risks are fake coins that borrow a real issuer's name, unlicensed platforms promising high interest, phishing that steals wallet access, and payments sent to the wrong address, which usually cannot be reversed. A licensed stablecoin reduces reserve risk but does not protect you from being tricked into sending it away.
The JPEX lesson
In September 2023 the SFC warned that no JPEX entity was licensed or had applied for a licence in Hong Kong, while JPEX advertised yields of around 20% a year and users reported being unable to withdraw. High promised returns plus no licence is the pattern to remember.
Five checks you can do right now
- Look up the issuer on the HKMA stablecoin register. If it is not listed, it is not a licensed Hong Kong stablecoin.
- Check any trading platform on the SFC's lists of licensed and suspicious platforms.
- Treat any "stablecoin with 10% interest" offer as a red flag. A stablecoin is a payment tool, not a savings product.
- Banks and regulators will not contact you on WhatsApp to sell you coins. Hang up and call the official hotline yourself.
- Unsure? Call the Police Anti-Scam Helpline 18222 before you send anything.
Stablecoin vs bank deposit vs e-HKD vs exchange token: what is the difference?
A stablecoin is issued by a licensed private company and backed by reserves; a bank deposit is a loan you make to a bank, covered by deposit protection; e-HKD would be issued by the central bank itself and has not launched to the public; and an exchange token is issued by a platform with no par redemption.
| Licensed HKD stablecoin | Bank deposit | e-HKD (CBDC) | Platform's own token (e.g. JPEX) | |
|---|---|---|---|---|
| Issued by | HKMA-licensed issuer | Licensed bank | HKMA (still at research stage) | The platform |
| Backed by | Segregated reserves, at least 100% | The bank's balance sheet | The central bank | Nothing guaranteed |
| Deposit Protection Scheme | No | Yes, up to the scheme limit | Not applicable | No |
| Redeem at HK$1? | Yes, legal right | Yes, withdraw at any time | Would be | No |
The bottom line on stablecoins
A licensed Hong Kong dollar stablecoin is a regulated digital form of money for paying and transferring. It is not a deposit, not an investment, and not a way to earn interest. The safeguards sit in the reserves and the licence, so your best protection is checking that licence before you use any coin.
Share this four-line summary
- A stablecoin is a digital token worth HK$1 each, backed by reserves.
- It is NOT a bank deposit and NOT covered by deposit protection.
- Only issuers on the HKMA register are licensed in Hong Kong.
- High interest or a WhatsApp sales pitch means scam: call 18222.
This article is general education, not investment, legal or tax advice. Digital assets are high-risk and can lose all their value.
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Frequently Asked Questions
Can I earn interest on a Hong Kong stablecoin?
No. Licensed stablecoins are designed as payment tools, and Hong Kong's rules do not allow licensed issuers to pay interest to holders. An offer of high interest on a stablecoin is a warning sign.
Is USDT a licensed stablecoin in Hong Kong?
No. USDT's issuer does not appear on the HKMA Register of Licensed Stablecoin Issuers, which listed two licensees as of its 23 April 2026 revision: Anchorpoint Financial and HSBC.
Can I turn HSBC RedCoin back into Hong Kong dollars?
Yes. HSBC says RedCoin is redeemable 1:1 for Hong Kong dollars, subject to its terms and conditions, which also set out timing and any charges.