The Government of Hong Kong has officially welcomed the passage of the Stablecoins Bill by the Legislative Council on May 21, 2025. This significant legislative move introduces a licensing regime for fiat-referenced stablecoin (FRS) issuers, aiming to solidify Hong Kong’s regulatory framework for virtual asset (VA) activities while encouraging innovation and maintaining financial stability.
The enactment of the Stablecoins Ordinance marks a milestone in Hong Kong’s approach to digital asset regulation. Under the new law, any person or business entity that issues fiat-referenced stablecoins in Hong Kong—or stablecoins pegged to the Hong Kong dollar, regardless of where the issuance takes place—must obtain a license from the Hong Kong Monetary Authority (HKMA). This requirement is designed to ensure a robust and transparent system governing digital currencies that claim to offer stability through fiat backing.
To be eligible for a license, applicants will need to meet stringent regulatory criteria. These include demonstrating sound reserve asset management practices, ensuring the proper segregation of client assets, and maintaining a clear and reliable stabilization mechanism. Furthermore, issuers must provide redemption at par value under reasonable and transparent conditions, giving consumers confidence in the value of the stablecoins they hold.
The ordinance also establishes a comprehensive compliance structure, requiring stablecoin issuers to adhere to anti-money laundering (AML) and counter-terrorist financing protocols, effective risk management policies, regular disclosures, and external audits. The HKMA has announced plans for additional industry consultations to fine-tune these regulatory details.
One of the law’s key protections is that only licensed institutions are authorized to issue or offer FRS to retail investors in Hong Kong. To prevent consumer fraud and misleading promotion, the ordinance restricts advertising to only those stablecoin products issued by licensed entities. This measure is especially critical during the six-month transitional period, where the authorities emphasize public vigilance against unlicensed offerings or deceptive marketing.
Christopher Hui, Secretary for Financial Services and the Treasury, emphasized the significance of the ordinance by stating that the regulation follows the principle of “same activity, same risks, same regulation.” He highlighted that this risk-based framework aligns with international standards and strengthens Hong Kong’s role as a global financial hub. Hui also pointed out that the regulation is crucial for promoting sustainable growth within the digital asset sector and for safeguarding users’ interests.
Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, echoed similar sentiments. He praised the ordinance for establishing a practical and adaptable regulatory environment, which he believes will support the responsible and long-term development of stablecoins and the broader digital asset ecosystem in Hong Kong.
The Stablecoins Ordinance is expected to come into force later this year. The government has ensured that the industry will have ample time to interpret the regulatory requirements and apply for necessary licenses during the transitional period.
Following this development, Hong Kong’s authorities have plans to expand their regulatory oversight in the virtual asset domain. Upcoming consultations are expected to address over-the-counter (OTC) trading and digital asset custody services. Additionally, a second policy statement on virtual asset development will be released soon, reinforcing the city’s ambition to become a leading center for blockchain and cryptocurrency innovation.