The Hong Kong government welcomed the Legislative Council’s passing of the Stablecoins Bill today, 21 May 2025. The bill would aim to establish a licensing regime for fiat-referenced stablecoin (FRS) issuers in Hong Kong.
The Hong Kong Stablecoins Bill also aims to strengthen Hong Kong’s regulatory framework for virtual asset (VA) activities, promoting financial stability while encouraging financial innovation.
Upon the implementation of the Stablecoins Ordinance, any person who, while doing business, issues an FRS in Hong Kong or issues an FRS that is purported to maintain a stable value in Hong Kong dollars (whether in or outside Hong Kong) will need a licence from the Hong Kong Monetary Authority.
The relevant persons must meet requirements in areas such as reserve asset management and redemption, including proper segregation of client assets, maintaining a robust stabilisation mechanism, and processing stablecoin holders’ requests for redemption at par value with reasonable conditions.
The relevant persons must also comply with a range of requirements, including those related to anti-money laundering and counter-terrorist financing, risk management, disclosure and auditing, and fitness and propriety.
The HKMA will conduct further consultations on the detailed regulatory requirements of the regime in due course.
The regulatory regime will provide stronger protections for the public and investors. Under the ordinance, only specified licensed institutions may offer an FRS in Hong Kong, and only an FRS from licensed issuers can be sold to retail investors.
To help prevent fraud and scams, only advertisements of licensed FRS issuances are permitted, even during the six-month non-contravention period. The public is advised to keep these rules in mind and be cautious when encountering FRS-related advertisements or messages.
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said,
“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.”
The Chief Executive of the Hong Kong Monetary Authority, Mr Eddie Yue, added,
“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 expected to take effect this year, giving the industry enough time to understand the licensing requirements. A transitional arrangement will also be in place to help businesses apply for a licence and adjust their operations to meet the regulatory regime.
The government aims to continue supporting the growth of the virtual assets sector. After introducing regulatory regimes for the VA trading platform and stablecoin issuers, the Government will soon begin consultations on VA over-the-counter and custodian services. It will also release a second policy statement on the development of virtual assets.
Featured image: Edited by Fintech News Hong Kong, based on image by bloodua via Freepik