The Hong Kong Monetary Authority (HKMA) on Tuesday said the first batch of licences for stablecoin issuers could be granted early next year at the earliest.

Applications are set to start from Friday when the Stablecoins Ordinance, a new law governing the industry, takes effect.

Stablecoin is a type of cryptocurrency typically pegged to a reference reserve asset, usually fiat currency such as the Hong Kong dollar or US dollar.

The new law requires all stablecoin issuers in the SAR to obtain a licence from the HKMA before issuing and marketing such virtual assets.

The market had earlier expected that the first batch of issuer licences might be issued within this year.

The HKMA's deputy chief executive, Darryl Chan, said only "a handful" of licences will be granted for the first batch.

"We do not have a specific target on how many licences we'll offer to applicants in the initial stage, as it really depends on the quality of applicants' use cases and their business. We have a very high bar," he said.

"That said, the licensing will be an ongoing rolling process, so even for applicants who didn't get a licence in the first round, we'll continue to communicate with them and see how they could improve and adjust to meet our requirements, and there'll still be chances of future issuances."

Raymond Chan, the HKMA's executive director (enforcement and anti-money laundering), said all stablecoin issuers should implement risk control measures, such as ascertaining ownership and controls of customers' virtual asset wallets. (Additional reporting by Reuters)