Fintech firms in Hong Kong are scrambling to raise equity to support expansion into cryptocurrencies, as the city began accepting applications for stablecoin issuer licenses on August 1.
According to Reuters, at least 10 companies listed in Hong Kong raised over US$1.5 billion through share placements in July, with proceeds earmarked for stablecoins, digital assets, and blockchain-based payment solutions.
These firms include digital asset platform OSL Group, retail cloud provider Dmall Inc, and AI company SenseTime Group.
Investor enthusiasm has been particularly strong for stablecoins, cryptocurrencies pegged to traditional assets such as the US dollar, driven by the passage of Hong Kong’s stablecoin bill in May, which officially comes into force this week.
The new regulatory framework has positioned the city as a key contender alongside the United States in establishing a compliant market for tokenised currencies.
“Fundraising activity linked to stablecoins and digital assets is seeing a notable increase,”
said Anthony Pang of interDmallnational law firm Baker McKenzie, which advised on Dmall’s HK$388 million share placement in July.
“The momentum in this space is real, and it’s accelerating.”
OSL raised US$300 million in late July to support global initiatives, including stablecoin development and digital payment networks.
The offering, handled by Macquarie, was finalised within three days, with bookbuilding completed in under three hours.
“Investor zeal toward cryptocurrencies and stablecoins was palpable,”
said Ivan Wong, Chief Financial Officer at OSL.
A newly launched index tracking Hong Kong-listed stablecoin-related stocks has surged 65% year-to-date, significantly outperforming the benchmark Hang Seng Index, which is up around 23%.
Despite the surge in interest, Hong Kong’s de facto central bank recently warned of “growing frothiness” and “excessive exuberance” surrounding the market.
Still, investor appetite is spreading to private equity and startup markets.
“Venture capitalists are very interested in this area, and many are actively looking at such projects,”
said Liu Honglin, an attorney at Shanghai-based Man Kun Law Firm, who advised digital payment firm Kun on a US$50 million raise in Hong Kong last month.
“There’s definitely a lot of excitement around stablecoin, but the sector is far from being frothy. It’s just the start of a trend.”
JF SmartInvest Holdings raised HK$785 million to invest in Real World Assets (RWA), digital tokens representing traditional assets such as equities and commodities.
SenseTime raised HK$2.5 billion and said it would explore blockchain, RWA, and stablecoin applications.
Other companies riding the crypto wave include ZA Online (6060.HK), Crypto Flow Technology (8198.HK), and Easou Tech (2550.HK).
According to Kishore Bhindi, a partner at Linklaters in Hong Kong, interest from custodians and investment managers suggests that “interest in these topics, and fintech applications more generally, is set to continue.”
Featured image credit: Edited by Fintech News Hong Kong, based on image by lifeforstock via Freepik