- Hong Kong has passed the Stablecoin Ordinance, establishing a licensing regime that treats stablecoins as payment tools.
- The Hong Kong Monetary Authority draws inspiration from the EU’s MiCA framework.
- The ordinance aims to prevent market overheating and strengthen Hong Kong’s role as a global fintech hub.
Hong Kong is implementing a stringent new licensing regime for stablecoin issuers, a move designed to cement the city’s status as a regulated hub for digital assets. Under the new Stablecoin Ordinance, however, there’s a key requirement: stablecoins must be anchored to the city’s legal tender.
The regulation aligns with a global push to bring stablecoins under formal oversight.
Focus on Payments, Not Speculation
The Hong Kong Monetary Authority (HKMA) has positioned stablecoins primarily as payment instruments rather than investment assets. According to HKMA Chief Executive Eddie Yue, this distinction is key to managing market expectations and risks.
The ordinance enforces high licensing thresholds, focusing on “practical application scenarios” and “business sustainability” to ensure that only compliant and capable issuers enter the market.
Notably, the HKMA launched a Stablecoin Issuer Sandbox last year to engage with potential issuers early and clarify regulatory expectations. However, participation in the sandbox does not guarantee licensing. Legislative Council member Wu Jiechuang highlighted this approach as a model of regulatory foresight that balances innovation with prudence.
Related: Stablecoin Market Hits Record $228 Billion as Global Banks and Corporations Pile In
Future Challenges and Global Cues
Despite legislative progress, challenges remain. Jiechuang noted that integrating stablecoins with traditional financial systems is still in an adaptation phase. He emphasized the need for convenience, operability, and financial risk prevention breakthroughs to enhance stablecoins’ practical use and market acceptance.
The lawmaker suggested Hong Kong could benefit from adopting the European Union’s Markets in Crypto-Assets (MiCA) framework for effective cross-border coordination and dynamic regulatory adjustments.
Inside the Licensing Requirements
The licensing regime requires issuers to demonstrate robust reserve asset management, price stabilization mechanisms, redemption policies, and anti-money laundering controls.
Applications must also show feasible business plans with sufficient financial and technical resources to operate sustainably through market fluctuations. HKMA expects that only a limited number of licenses will be granted initially to ensure market stability and protect users.
With the ordinance coming into effect on August 1, 2025, and license applications opening shortly after, Hong Kong is laying the foundation for the responsible growth of stablecoins.
Hong Kong Aligns with Global Regulatory Trends
Hong Kong’s regulatory framework is closely aligned with international standards, including the 2023 Global Regulatory Framework for Crypto-Asset Activities issued by the Financial Stability Board (FSB).
Related: Trump’s Push for Speed Puts Senate-Passed GENIUS Act to a Political Test in the House
The ordinance reflects the city’s proactive stance amid developments overseas, such as the EU’s MiCA implementation in 2024 and ongoing stablecoin legislation in the United States. Notably, the U.S. passed the GENIUS Act last week, advancing it to the House of Representatives for further review.
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