On 21 May 2025, the Government of the Hong Kong Special Administrative Region welcomed the passage of the Hong Kong Stablecoins Bill by the Hong Kong Legislative Council, marking the formal adoption of the Stablecoins Ordinance. This landmark legislative development establishes a dedicated licensing regime for fiat-referenced stablecoin (FRS) issuers and sets out stringent regulatory requirements to bolster Hong Kong’s fast-evolving virtual asset (VA) ecosystem. The implementation of the Ordinance will be overseen by the Hong Kong Monetary Authority (HKMA), with strategic guidance from the Hong Kong Financial Services and the Treasury Bureau (HK FSTB).
The Stablecoins Ordinance introduces a risk-based, internationally aligned regulatory framework aimed at ensuring financial stability and investor confidence. Under its provisions, any person who, in the course of business, issues a fiat-referenced stablecoin in Hong Kong, or one linked to the Hong Kong dollar irrespective of issuance location, must obtain a licence from the HKMA. Licensees must demonstrate full compliance in areas including reserve asset management, segregation of client funds, redemption at par value, and the operation of robust stabilisation mechanisms. They must also meet comprehensive standards related to anti-money laundering and counter-terrorist financing, risk controls, disclosure, audit practices, and overall institutional integrity. The HKMA is expected to conduct further consultations on the technical requirements for compliance under this regime.
The Ordinance ensures that only licensed institutions are authorised to issue or offer stablecoins to retail investors in Hong Kong, thereby setting clear market entry standards. During both the six-month non-contravention period and beyond, advertising is restricted exclusively to those FRS offerings that are duly licensed. This measure aims to combat fraud and protect consumers from misleading financial promotions. The public has been advised to remain cautious and verify the legitimacy of any FRS-related advertisements or investment solicitations.
Commenting on the legislation, the Secretary for Financial Services and the Treasury, Mr. Christopher Hui, stated, “The Ordinance adheres to the ‘same activity, same risks, same regulation’ principle, with a focus on a risk-based approach to promote a robust regulatory environment. This is not only in line with international regulatory requirements, but also lays a solid foundation for Hong Kong’s virtual asset market, which, in turn, promotes the sustainable development of the industry, protects users’ rights and interests, and strengthens Hong Kong’s status as an international financial centre.”
The Chief Executive of the Hong Kong Monetary Authority, Mr. Eddie Yue, stated: “The Ordinance has established a risk-based, pragmatic, and flexible regulatory regime. We believe that a robust and fit-for-purpose regulatory environment would provide favourable conditions to support the healthy, responsible, and sustainable development of Hong Kong’s stablecoin and the broader digital asset ecosystem.”
The Ordinance is scheduled to come into effect within the year, providing a grace period for industry stakeholders to align their operations and licensing strategies. The transitional arrangement embedded within the regime allows for orderly compliance and continued market functioning while the licensing process is underway.
Following the rollout of the licensing frameworks for VA trading platforms and stablecoin issuers, the Hong Kong Government will soon commence public consultations on the regulation of over-the-counter VA services and digital asset custodianship. In tandem, Hong Kong Government will issue a second policy statement to further define its long-term vision for virtual assets.
(Source: https://www.hkma.gov.hk/eng/news-and-media/press-releases/2025/05/20250521-3/, https://www.info.gov.hk/gia/general/202505/21/P2025052100374.htm)
