Rush to Enact Stablecoin Regulations in Hong Kong by August
Hong Kong Establishes Comprehensive Stablecoin Regulation Framework
The Hong Kong Monetary Authority (HKMA) has announced a new regulatory framework for stablecoins, effective August 1, 2025. This framework, aimed at attracting stablecoin issuers and fostering innovation in the region's digital asset sector, requires any entity issuing fiat-referenced stablecoins pegged to the Hong Kong dollar to obtain a license from the HKMA [1][3].
Under this new regulation, stablecoins are defined as cryptographically secured digital tokens used as a medium of exchange, store of value, or unit of account, operable on distributed ledgers and maintaining stable value against one or a basket of assets [1]. The ordinance covers both local and foreign issuers.
Unlike jurisdictions like the EU under MiCA, which separates e-money tokens and asset-referenced tokens with issuer restrictions primarily for EU-based entities, Hong Kong mandates all stablecoin issuers referencing the Hong Kong dollar to be licensed by the HKMA, with strict reserve backing requirements [1]. Issuers must hold high-quality, liquid reserve assets equal in market value to the stablecoins in circulation, and comply with anti-money laundering (AML), combating the financing of terrorism (CFT) rules, regular audits, and disclosures [1][5].
Hong Kong's approach aims to attract stablecoin issuers by offering a regulated but flexible environment that embraces multicurrency stablecoins, promoting use cases beyond just the US dollar to facilitate trade [2]. The HKMA intends to issue a limited number of licenses initially, emphasizing quality and sustainable development, thereby fostering market confidence and positioning Hong Kong as a global digital asset hub with robust financial stability and innovation safeguards [2][5].
Interestingly, Hong Kong Dollar stablecoins are allowed to use US dollars as reserves due to the currency peg. This flexibility aligns with Hong Kong's goal to attract stablecoin business [2].
In addition, the licensing regime for stablecoins, once operational, will provide suitable guardrails for relevant stablecoin activities. The HKMA has permissive details in the consultation, such as allowing the duration of securities used as part of the stablecoin's reserves to be up to a year [4]. Furthermore, the HKMA has considerable latitude to approve other business activities of the stablecoin issuer.
Last year, Hong Kong launched a grant scheme to attract digital bond issuers, further demonstrating its commitment to fostering growth in the digital asset sector [6]. Singapore has followed suit with a similar scheme to attract digital bond issuers.
The United States is also progressing its Genius Act stablecoin legislation, which may get a Senate vote next week [7].
In conclusion, Hong Kong’s stablecoin regime stands out for its comprehensive licensing framework tied explicitly to the Hong Kong dollar, strict reserve and compliance requirements, and a strategy to selectively onboard high-quality issuers to boost innovation and financial stability in the region’s crypto sector [1][2][5].
- The comprehensive stablecoin regulation framework established by Hong Kong, effective from August 1, 2025, offers insights into the government's approach to promoting financial stability and fostering innovation in its digital asset sector.
- The Hong Kong Monetary Authority (HKMA)requires any entity issuing fiat-referenced stablecoins pegged to the Hong Kong dollar to obtain a license, demonstrating the government's rigorous regulation of stablecoin activities within its jurisdiction.
- In an effort to attract stablecoin issuers, Hong Kong's regulation framework offers a stable and technology-driven environment, with the intention of positioning itself as a global digital asset hub and maintaining robust financial stability and innovation safeguards.
