The financial landscape in Hong Kong is undergoing a transformative shift with the passage of the Stablecoin Bill on May 21, 2025. Approved by the Legislative Council of the Hong Kong Special Administrative Region, this landmark legislation establishes a licensing regime for fiat-backed stablecoin issuers, reinforcing Hong Kong’s commitment to balancing financial innovation with systemic stability.
Backed by the Hong Kong Monetary Authority (HKMA), the new regulatory framework aims to integrate virtual assets into the mainstream financial system while safeguarding investors and maintaining monetary integrity. With the law expected to take effect within 2025, industry players now have a clear roadmap—and sufficient time—to align operations with upcoming compliance requirements.
A New Regulatory Era for Virtual Assets
The Stablecoin Ordinance marks a pivotal step in Hong Kong’s broader strategy to become a global hub for digital finance. Under the new rules, any entity issuing fiat-backed stablecoins—especially those pegged to the Hong Kong dollar (HKD)—must obtain a license from the HKMA. This applies not only to issuers operating within Hong Kong but also to those based overseas if their stablecoins claim to be pegged to the HKD.
To qualify for a license, applicants must meet stringent criteria, including:
- Maintaining fully backed reserves
- Ensuring client assets are segregated
- Establishing robust redemption mechanisms
- Complying with anti-money laundering (AML) and counter-terrorist financing (CFT) standards
- Submitting to regular audits and transparent disclosures
These measures are designed to prevent systemic risks and protect retail investors. Notably, only licensed stablecoins will be permitted for sale to the general public, and advertising will be strictly limited to approved issuers—curbing misleading promotions and potential fraud.
👉 Discover how leading financial institutions are preparing for the new stablecoin era.
First Wave of Licensed Issuers: Collaboration Across Industries
The HKMA has already identified the first group of participants in its regulatory sandbox, signaling strong early momentum. Five institutions are involved, with three forming a strategic joint venture: Standard Chartered Hong Kong, Animoca Brands Limited, and Hong Kong Telecom (HKT).
This cross-sector alliance brings together a global bank, a Web3 technology leader, and a telecommunications provider—each contributing unique strengths:
- Standard Chartered: Leverages its global banking infrastructure and experience in digital asset partnerships to ensure compliance and operational resilience.
- Animoca Brands: Drives innovation by integrating stablecoins into Web3 ecosystems, gaming, and decentralized finance (DeFi) applications.
- HKT: Enhances user experience through its mobile wallet expertise, focusing on seamless local and cross-border payments.
Dominic Maffei, Head of Digital Assets and Fintech at Standard Chartered Hong Kong, confirmed that the consortium is accelerating preparations following the bill’s passage. “We’re moving swiftly to finalize our joint venture structure and will share more updates in due course,” he said.
Expanding Use Cases Beyond Speculation
Unlike earlier waves of crypto adoption centered on trading and speculation, this new phase emphasizes real-world utility. Stablecoins like the proposed HKD-pegged HKDR aim to streamline transactions across e-commerce, supply chains, and international remittances.
Rita Liu, CEO of Circle Innovation Technology, one of the other sandbox participants, emphasized that their goal isn’t to compete with USD-backed giants like USDT—but to complement them. “Our vision is to expand use cases, not capture market share,” she noted. Circle plans to issue HKDR on the Ethereum blockchain and has already partnered with custody provider Cobo, cross-border payment firm LianLian Global, and exchange HashKey Exchange.
Meanwhile, JD Blockchain Tech (Hong Kong)—a subsidiary of JD.com—sees stablecoins as a tool to optimize global supply chain finance and cross-border settlements. A JD Group vice president explained that while regulatory frameworks vary globally, Hong Kong’s progressive stance allows for scalable deployment. “In regions like the EU, MiCA requires local incorporation—but in many markets, partnerships with local exchanges suffice.”
Global Context: Aligning with International Standards
Hong Kong’s move follows similar regulatory advancements worldwide:
- The U.S. Senate advanced the GENIUS Act in May 2025, aiming to create a federal framework for dollar-backed stablecoins.
- The European Union’s MiCA (Markets in Crypto-Assets) regulation took full effect in late 2024, setting strict rules for issuers across member states.
By adopting a risk-based, principles-driven approach—“same activity, same risk, same regulation”—Hong Kong positions itself as a bridge between East and West in digital finance. Financial Secretary Christopher Hui emphasized that the ordinance strengthens Hong Kong’s role as an international financial center while fostering sustainable innovation.
Transition Period Offers Strategic Opportunity
The HKMA has introduced a transitional period to allow current and prospective issuers to adapt. During this time:
- Existing projects can continue development under supervision
- New entrants can build compliant systems
- Stakeholders can engage in upcoming consultations on OTC trading and custody services
This phased rollout reduces disruption and encourages responsible growth. The authority also plans to release a second Virtual Asset Policy White Paper, further clarifying its long-term vision.
👉 See how businesses can navigate the evolving regulatory landscape with confidence.
Frequently Asked Questions (FAQ)
Q: What is a fiat-backed stablecoin?
A: It’s a type of cryptocurrency designed to maintain a stable value by being backed 1:1 with a reserve asset, typically a fiat currency like the U.S. dollar or Hong Kong dollar.
Q: Why is Hong Kong regulating stablecoins now?
A: As digital finance grows, so do risks to financial stability. Regulation ensures consumer protection, prevents illicit activities, and supports responsible innovation in line with global standards.
Q: Can unlicensed entities still issue HKD-pegged stablecoins?
A: No. Once the ordinance takes effect, any entity issuing or promoting HKD-pegged stablecoins in Hong Kong must hold an HKMA license.
Q: How does the licensing process work?
A: Applicants must demonstrate robust reserve management, redemption capabilities, AML compliance, governance frameworks, and undergo third-party audits.
Q: Will this affect existing cryptocurrencies like Bitcoin or Ethereum?
A: The ordinance specifically targets fiat-backed stablecoins. Broader crypto regulations are covered under separate licensing regimes for exchanges and service providers.
Q: What happens during the transition period?
A: Unlicensed issuers can continue operating temporarily while preparing for full compliance. The HKMA will provide guidance and support throughout the process.
With clear regulations on the horizon, Hong Kong is setting a benchmark for secure, scalable digital finance. As institutions race to launch compliant stablecoins, users stand to gain faster, cheaper, and more transparent financial services—all within a trusted regulatory environment.
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