Hong Kong Introduces New Rules for Stablecoins!

22 May 2025 at 06: 44

Reading time: 2 minutes

Hong Kong has passed a groundbreaking law to regulate fiat-backed securities stablecoins. This is a significant step that will continue to position the city as a global hub for digital finance. On May 21, Hong Kong lawmaker Johnny Ng confirmed that the bill had been approved by the Legislative Council after its third reading. The new regulations are expected to come into effect before the end of 2025.

Licensing Framework for Stablecoin Issuers

This new legislation introduces a licensing framework for stablecoin issuers, overseen by the Hong Kong Monetary Authority (HKMA). The government is providing a transition period for companies to adapt, apply for licenses and meet regulatory requirements. Once the rules are in place, only licensed entities will be allowed to issue fiat-referenced stablecoins pegged to the Hong Kong dollar, regardless of their geographic location.

The move aims to foster trust, transparency and strong compliance standards within the city’s growing virtual asset ecosystem. “Hong Kong’s stablecoins are backed by fiat currencies as the underlying assets, and we welcome global enterprises and institutions interested in issuing stablecoins to apply in Hong Kong,” Ng’s words underscore Hong Kong’s openness to international cooperation.

Hong Kong's stablecoin law

The Hong Kong government states that the new regulations require any entity that has a fiat reference stablecoin (FRS) that is pegged to the Hong Kong dollar must adhere to strict operational standards. These include clear asset segregation, par value exchange and a reliable mechanism for maintaining price stability.

In addition, these entities must comply with anti-money laundering laws, risk management requirements, disclosure obligations and independent auditing requirements. Only licensed companies are also allowed to promote or advertise these products to the public. Christopher Hui, the Secretary for Financial Services and the Treasury, stressed that the legislation adopts a risk-based regulatory model that is consistent with global standards. He added that this approach will contribute to a safer user environment, long-term growth of the industry and strengthen Hong Kong’s reputation as a leading international financial centre.

So, what does all this mean for the future of stablecoins and digital finance in Hong Kong? The possibilities are endless and the curiosity to explore these new technologies is growing by the day.

Frequently Asked Questions

What exactly does the new law for stablecoins entail?
The law introduces a licensing framework for stablecoin issuers and requires them to comply with strict operational standards and regulations.

How will this law impact the growth of digital finance in Hong Kong?
The law promotes trust and transparency, which is essential for the growth of the sector and Hong Kong's reputation as a financial centre.

When will the law come into effect?
The law is expected to come into effect before the end of 2025.

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