On May 21, 2025, the Hong Kong Legislative Council officially passed the (Stablecoin Bill) after the third reading, marking Hong Kong's entry into a new era of stablecoin compliance regulation. After being signed by the Chief Executive of Hong Kong and published in the government gazette, the bill will officially take effect, becoming the first stablecoin regulatory legislation officially implemented in the Asia region, leading the way ahead of the U.S. stablecoin GENIUS Act.
I. (Stablecoin Bill) Journey Review
Hong Kong's promotion of stablecoin legislation began in 2022, undergoing various stages such as extensive consultation, sandbox pilots, and regulatory refinement, as follows:
II. Main content of the (Stablecoin Bill)
Regulatory authority: The Hong Kong Monetary Authority (HKMA) is responsible for stablecoin regulation and licensing.
Regulatory scope:
Mainly focuses on stablecoins pegged to official fiat currencies (fiat stablecoins);
Regardless of whether issued in Hong Kong or abroad, as long as pegged to the value of the Hong Kong dollar or marketed to the public in Hong Kong, it is subject to regulation.
Licensing system and application conditions:
Licensees must have a paid-up capital of HKD 25 million;
Establish a local entity in Hong Kong;
Management must be 'fit and proper' persons;
Must have a robust reserve management mechanism, with reserve assets equal to or greater than the circulating face value;
Holders should enjoy clear redemption rights and procedures disclosure.
Compliant sales channels: Only the following institutions may sell stablecoins to the public:
Stablecoin issuers licensed by the HKMA;
Virtual asset platforms licensed by the Hong Kong Securities and Futures Commission;
Licensed corporations engaged in securities trading activities;
Hong Kong-recognized banking institutions.
III. Six essential elements of Hong Kong's stablecoin licensing standards
To ensure that stablecoin issuance possesses stability, transparency, and controllable risk, the Hong Kong (Stablecoin Bill) clarifies the six core elements that licensees must comply with:
First: Reserve asset management and stability mechanism
Stablecoins must be 100% backed by reserve assets, and their market value should always be no less than the circulating face value;
A sound stability mechanism must be established, including risk buffer design, algorithmic/fiduciary support for currency exchange, etc.;
Reserve assets should be properly segregated and managed to prevent misuse;
All stability mechanisms and asset information must be transparently disclosed to facilitate public supervision.
Second: Redemption guarantee mechanism
Holders have the right to redeem stablecoins at face value after submitting a valid redemption request.
Redemption conditions and fees must not be overly complex or unreasonable.
All redemption details (procedure, timing, conditions, fees, rights) should be clearly disclosed to ensure that user rights are not infringed.
Third: Establish a local entity in Hong Kong
Licensees must establish a legal entity in Hong Kong;
To enable the financial commissioner to implement localized supervision, inspection, and law enforcement actions.
Fourth: Adequate financial resource requirements
Issuing institutions must have stable operational capabilities and capital strength;
Clearly require a minimum paid-up capital of HKD 25 million, reflecting risk resistance capability.
Fifth: Fit and proper criteria
Key management such as shareholders, directors, and CEOs must pass the 'fit and proper' assessment;
Requirements for professional knowledge, experience background, and good reputation to ensure the professionalism and compliance of regulated activities.
Sixth: Prudent operations and risk control
A comprehensive risk management system must be established, covering market, operational, legal, and other risks;
The risk control mechanism must be commensurate with the scale and complexity of its operations;
Strict compliance and internal control measures must be established to prevent money laundering and terrorist financing activities.
IV. The significant meaning of Hong Kong (Stablecoin Bill) officially passing
The Hong Kong (Stablecoin Bill) has officially passed, marking Hong Kong as one of the first jurisdictions in the world to implement a dedicated regulatory framework for stablecoins. This legislation has far-reaching significance, reflected in the following five aspects:
🧭 I. Establish Asia's first stablecoin legal system, seizing international discourse power
Hong Kong becomes the first international financial center in the world to pass dedicated stablecoin legislation, leading the U.S., EU, UK, and other regions;
Stablecoin regulation has transitioned from 'sandbox pilot' to 'legal track', showcasing Hong Kong's proactive and innovative policies in virtual asset compliance.
Helps attract global stablecoin issuers, Web3 companies, and fintech firms to establish entities and apply for licenses in Hong Kong.
🛡️ II. Protect investor rights and establish market confidence
Clearly require licensed issuers to have 100% reserve coverage and a mandatory redemption mechanism.
The information disclosure mechanism should be clear to prevent fraud and misinformation.
If a stablecoin goes bankrupt or unpegs, investors can pursue legal claims, significantly enhancing user trust and usage rates.
⚙️ III. Promote the integrated development of 'virtual assets + fiat currency' in Hong Kong
Support the development of compliant stablecoins pegged to the Hong Kong dollar, expanding the scenarios and influence of the Hong Kong dollar in the digital economy;
Stablecoins are expected to become the infrastructure for the local Web3 ecosystem, cross-border payments, trading settlements, and asset tokenization;
In the long term, it could form a Hong Kong version of USDT, USDC, etc., enhancing Hong Kong's influence in the international stablecoin market.
📉 IV. Prevent and control financial risks, combat illegal capital flows
The financial commissioner is empowered with comprehensive regulatory, investigatory, punitive, and suspension rights, covering risks such as unlicensed issuance, illegal sales, false advertising, and money laundering activities;
Joint regulation with the Hong Kong Securities and Futures Commission and the banking system to build a layered, closed-loop, and secure stablecoin regulatory system;
Enhance the capability to combat the 'shadow coin market' and prevent Hong Kong from becoming a regulatory arbitrage paradise.
🌐 V. Enhance alignment with international regulation, beneficial for future cross-border mutual recognition
The framework references international standards such as IMF, FSB, BIS, MiCA, etc., and possesses high compatibility;
Facilitates future participation of Hong Kong stablecoins in the mainland digital renminbi/cross-border DC/EP system docking or interconnectivity with international financial hubs;
Provides pioneering experience for the 'Hong Kong testing ground' for China's and international crypto regulation.
Finally: Many views in this text represent my personal understanding and judgment of the market and do not constitute investment advice for you.