Hong Kong will begin issuing stablecoin licenses in March and introduce legislation to regulate crypto dealers and custodians later this year, Financial Secretary Paul Chan announced in his budget speech Wednesday.

The stablecoin licenses represent Hong Kong’s first formal approval of digital currency issuers. Legislation for dealers and custodian service providers will broaden the regulatory framework beyond existing rules for trading platforms.

“We will continue facilitating licensed issuers in Hong Kong to explore different application scenarios in a compliant and risk-controlled manner,” Chan said.

The city is racing to compete with Singapore and Dubai for regional crypto infrastructure business. Broader product offerings for…