The Hong Kong1 Government has confirmed that the Stablecoins Ordinance will take effect on 1 August 2025,2 requiring issuers of fiat-referenced stablecoins in Hong Kong or those pegged to the Hong Kong dollar ("HKD") to be licensed by the Hong Kong Monetary Authority ("HKMA").
Overview of the Stablecoins Ordinance
The Stablecoins Ordinance aligns Hong Kong's virtual assets regulatory framework with international standards under the "same activity, same risks, same regulation" principle.
The Stablecoins Ordinance sets out a regulatory framework for activities relating to "specified stablecoins" ("Specified Stablecoins"). Specified Stablecoins, as a type of virtual assets used as a medium of exchange, maintain a stable value with reference to one or more official currencies, such as the HKD, or a digital representation of value.3 Issuers of Specified Stablecoins in Hong Kong must obtain a licence from the HKMA and continue to comply with the comprehensive requirements.
Key Provisions of the Licensing Regime
The Stablecoins Ordinance introduces a comprehensive regulatory framework for the issuance, offering, and marketing of Specified Stablecoins. Below are the key provisions: –
Licensing Requirement
Any person engaging in the following activities must obtain a license from the HKMA: –
- issuing Specified Stablecoins in Hong Kong in the course of business;
- issuing Specified Stablecoins outside Hong Kong that are pegged, wholly or partly, to the HKD; and
- carrying out activities designated by the HKMA as "regulated stablecoin activities".
Requirements of Licensed Issuers
To obtain a licence from the HKMA for issuing Specified Stablecoins, applicants must satisfy, including but not limited to, the following minimum criteria: –4
Offering Restrictions The Stablecoins Ordinance regulates not only the issuance of Specified Stablecoins, but also who can offer Specified Stablecoins, including but not limited to: –
- Licensees under the Stablecoins Ordinance;
- SFC-licensed virtual asset trading platform operators under the Securities and Futures Ordinance (Cap. 571);
- SFC-licensed corporations for Type 1 (dealing in securities) activity;
- Authorised institutions under the Banking Ordinance (Cap. 155);
- Stored value facility ("SVF") licensees under the Payment Systems and Stored Value Facilities Ordinance (Cap. 584);
Under the new regime, Specified Stablecoins issued by HKMA-licensed issuers can be offered to retail investors; others are restricted to professional investors or exempted persons designated by the HKMA or Financial Secretary. Transitional Arrangements Existing stablecoin issuers ("Issuers") have a three-month period from 1 August 2025 ("Effective Date") to apply for a licence, during which they may continue regulated stablecoin activities without immediate penalty. Issuers meeting the following conditions may receive a six-month extension: –
- Submitting a license application within three months from the Effective Date;
- Receiving written confirmation from the HKMA acknowledging the application;
- Providing a written statement confirming they were conducting regulated stablecoin activities in Hong Kong before the Effective Date; and
- Providing a written undertaking to comply with regulatory requirements applicable to licensed issuers upon receiving a temporary license.
Issuers failing to apply within three months will enter a one-month wind-down period starting three months after the Effective Date. Issuers whose applications are rejected or withdrawn will enter a one-month wind-down period from the date of rejection or withdrawal, with the option to apply for an extension.AML/CFT Requirements On 26 May 2025, the HKMA released a consultation paper outlining proposed AML/CFT requirements for regulated stablecoin activities. Key proposals include, but are not limited to: –
- Customer Due Diligence ("CDD"): Conducting CDD for customers involved in issuance or redemption transactions of HK$8,000 or more, including verifying wallet ownership;
- Unhosted Wallets: Implementing enhanced monitoring, transaction limits, and screening for transfers to unhosted wallets to mitigate money laundering and terrorist financing ("ML/TF") risks;
- Ongoing Monitoring: Using blockchain analytics to track transaction histories and detect illicit activities, with mandatory suspicious transaction reporting;
- Travel Rule Compliance: Adhering to virtual asset transfer requirements under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), ensuring due diligence on custodial wallet providers; and
- Secondary Market Monitoring: Proposing measures such as limiting primary distribution to regulated entities, using blockchain analytics, and blacklisting illicit wallet addresses to combat ML/TF risks in peer-to-peer trading.
Feedback on these proposals is due by 30 June 2025.Implications for the Virtual Asset Industry Enhanced Investor Confidence: The stringent licensing requirements, including reserve asset segregation and AML/CFT compliance, provide greater assurance to investors, reducing the risk of fraud and financial instability.
- Attracting Global Players: The Stablecoins Ordinance's alignment with international standards and its pragmatic approach make Hong Kong an attractive destination for both traditional financial institutions and fintech startups.
- Compliance Challenges: Smaller issuers may face significant costs in meeting the HKMA's high regulatory standards, particularly in areas like reserve management, ongoing auditing, and AML/CFT compliance.
Conclusion The Stablecoins Ordinance, set to take effect on 1 August 2025, represents a significant step forward in Hong Kong's digital finance journey. By balancing innovation with robust regulation, the Stablecoins Ordinance enhances market integrity, protects consumers, and positions Hong Kong as a competitive player in the global virtual asset landscape. Collaboration between regulators, issuers, and industry stakeholders will be essential to ensure a smooth transition and sustainable growth in Hong Kong's stablecoin ecosystem.For issuers, compliance with the Stablecoins Ordinance will require significant investment in legal, operational, and financial systems, especially regarding reserve asset management and AML/CFT controls. While this may raise barriers to entry for smaller or less well-capitalised firms, it is expected to enhance overall market credibility and attract established financial institutions and global fintech companies to the Hong Kong market.For investors and users, the new licensing and supervisory requirements are designed to boost confidence in the safety and reliability of stablecoins available in Hong Kong, particularly for retail users who will have access only to products issued by HKMA-licensed entities.
| Requirement | Details |
| Corporate Structure | The applicant must be a company, or an authorized institution incorporated outside Hong Kong. |
| Financial Resources | The applicant must have a minimum paid-up share capital of HK$ 25 million or its equivalent, and adequate liquid assets. |
| Reserve Assets | The applicant must establish an effective stabilisation mechanism for its Specified Stablecoins, maintaining a pool of reserve assets at least equal to the par value of the stablecoins in circulation, which is segregated from any other pool of reserve assets, ensuring high quality and liquidity, and allowing timely redemptions at par value without excessive fees. |
| Redemption | Process redemption requests of the Specified Stablecoins by holders at par value without undue delay and without having to face burdensome conditions and fees. |
| AML/CFT Compliance | Implement effective anti-money laundering and counter-terrorist financing ("AML/CFT") systems and controls. |
| Disclosure and Auditing | Provide sufficient and timely disclosures to the public regarding reserve asset management policies, risk assessments, composition, and market value, and undergo regular independent verification and audits. |
| Fitness and Propriety | Ensure key personnel, including controllers, chief executives, directors, and stablecoin managers, meet the HKMA's fitness and propriety standards. |
| Local Presence | Maintain a physical presence in Hong Kong for regulatory oversight. |
Footnotes
1. In this article, "Hong Kong" means the "Hong Kong Special Administrative Region of the People's Republic of China".
2. On 21 May 2025, the Legislative Council of Hong Kong passed the Stablecoins Bill; "Stablecoins laws effective Aug 1".
3. Section 4 of the Stablecoins Ordinance
4. Schedule 2 Part 2 of the Stablecoins Ordinance
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