A Brief Analysis of Stablecoin Licenses and On-Chain Funding

Original text: CMB International Wealth Management

Event Background

On January 21, 2026, Mr. Paul Chan, the Financial Secretary of Hong Kong, delivered a speech at the Davos Forum, emphasizing that Hong Kong, as an international financial center, will adopt an active and prudent strategy to develop digital assets, promoting responsible and sustainable market development based on the principle of "same activities, same risks, same regulation." On April 10, 2026, the Hong Kong Monetary Authority officially announced the first batch of "stablecoin issuer licenses," awarded to HSBC Hong Kong and Anchor Financial Technology Limited (led by Standard Chartered Bank, Animoca Brands, and Hong Kong Telecommunications), marking a new phase in the regulatory framework for fiat-backed stablecoins in Hong Kong, aimed at protecting users and regulating issuance activities. Additionally, the Hong Kong Special Administrative Region government is actively promoting tokenization development, having issued three batches of tokenized green bonds totaling approximately $2.1 billion; at the same time, a regulatory sandbox has been launched to encourage application innovation.

01 Overview

At the funding end, currency in the real world can exist in tokenized form. Institutions or individuals in different financial ecosystems have varying understandings and applications of currency. Firstly, tokens that are pegged 1:1 to fiat currency, such as stablecoins issued by private entities and operating on public chains, are one of the most discussed forms of tokens in the current market. On the other hand, central bank-issued digital currencies (CBDCs) can be seen as fiat tokens operating within a centralized system. Secondly, according to the theory of money supply, in addition to cash in circulation (M0), M1 (narrow money) includes demand deposits held by businesses and individuals, while M2 (broad money) includes time deposits. By tokenizing deposits, they can be used as one of the on-chain payment tools.

02 Classification of On-Chain Funding Forms

How to understand the development of RWA at the funding end? We can refer to the diagram mentioned in a previous paper by the Bank for International Settlements (BIS) (as shown below) to understand it. In various classifications, focusing on the intersection of Electronic and Universally accessible, we will find that the three directions covered by the on-chain funding end are: 1) CBCC, corresponding to central bank digital currency; 2) bank deposit, corresponding to deposit tokens; 3) Cryptocurrency, including stablecoins.

Figure 1: Currency Classification Diagram

(Data source: BIS)

1. Central Bank Digital Currency (CBDC) is a digital fiat currency issued by the national central bank, representing a digital extension of traditional paper money and coins. It exists in electronic form, typically pegged 1:1 to the value of fiat currency, and is directly controlled and supervised by the central bank. CBDCs aim to improve payment efficiency, promote financial inclusion, and reduce cash usage. Their potential advantages include enhancing the effectiveness of monetary policy, reducing fraud and money laundering risks, and facilitating cross-border payments. However, challenges such as privacy protection, cybersecurity, and financial system stability also exist. Several countries worldwide, including China, Sweden, and the Bahamas, are conducting pilot studies on CBDCs and maintaining international cooperation. The development of central bank digital currencies represents a shift in the form of money and will have a profound impact on the future financial system and economic behavior.

2. Deposit tokens are essentially still bank liabilities, where banks tokenize customers' fiat currency deposits (such as demand deposits and time deposits) on a distributed ledger at a 1:1 ratio. They are not cryptocurrencies but represent the bank's debt to depositors, thus their risks and legal status are the same as traditional deposits.

It is worth noting that a key advantage of deposit tokens over stablecoins is that they can generate interest (the upgrade concept of digital RMB 2.0 draws on this point). Stablecoin issuers typically earn revenue from their reserve assets, but this revenue is generally not passed on to token holders. In contrast, deposit tokens can pay holders interest generated from their bank deposits, which is significantly attractive for institutions with large balances, such as cryptocurrency trading companies that use stablecoins for fund transfers and as collateral.

• 1) Tokenization of demand deposits: Customers' demand deposits can be tokenized, supporting real-time, cross-border transfers and settlements 24/7, effectively enhancing liquidity.

• 2) Tokenization of time deposits: Time deposits can also be tokenized, usually implemented through technologies like smart contracts, and can only be fully or partially released or enjoy specific returns when certain conditions are met (e.g., maturity, reaching a preset amount). However, they essentially still represent the token of time deposits.

3. Stablecoins are cryptocurrencies pegged to fiat currencies or other assets, primarily aimed at maintaining value stability. Based on collateral forms, stablecoins can be divided into several types, with the following being the four main collateral types:

• 1) Fiat-collateralized stablecoins. This type of stablecoin is backed by fiat currencies (such as USD, EUR, etc.). For example, for every stablecoin issued, the issuing entity retains $1 in reserves in a bank account.

• 2) Crypto-collateralized stablecoins. These stablecoins are backed by other cryptocurrencies. To achieve value stability, they typically use an over-collateralization method, where users need to provide more valuable cryptocurrencies as collateral.

• 3) Algorithmic stablecoins. Algorithmic stablecoins do not rely on any external collateral but use algorithms to control the circulating supply to maintain value stability. These stablecoins will increase supply when prices rise and decrease supply when prices fall.

• 4) Commodity-collateralized stablecoins. These stablecoins are based on physical commodities (such as gold, oil, etc.). For example, the value of each stablecoin can be linked to the market value of a certain commodity.

03 Conclusion

We can analyze the evolution of the on-chain world not only from the technical and regulatory dimensions but also from the funding and asset ends to grasp the current market stage.

Firstly, at the on-chain funding end (as shown in the diagram below), corresponding to stablecoins are the central bank digital currencies (CBDCs) issued by various central banks. At the same time, taking Hong Kong as an example, EnsembleTX will continue to operate in 2026, laying a solid foundation for the next phase of innovation. Cross-bank settlement of tokenized deposit transactions will first be conducted through the Hong Kong dollar real-time gross settlement system (RTGS), and the trial environment will gradually upgrade and optimize to support 24/7 settlement of tokenized central bank currencies, promoting the continuous development of a broader tokenized ecosystem in Hong Kong.

Figure 2: On-Chain Funding Classification Diagram

(Data source: JPMorgan & Oliver Wyman, Deposit Tokens: A Foundation for Stable Digital Money)

Secondly, at the on-chain asset end, as investment demand increasingly emphasizes the spatial and temporal dimensions, asset types with lower minimum investment amounts and trading periods expanded to 24/7 will highly align with the characteristics of the on-chain funding end.