Hong Kong’s highly anticipated stablecoin licensing regime is set to officially launch on August 1, a move confirmed by Secretary for Financial Services and the Treasury, Christopher Hui. The new regulations mark a significant step in the region’s commitment to building a robust and prudently regulated virtual asset ecosystem designed to foster market innovation.
Speaking at the Hong Kong Digital Finance Awards on July 3, Hui emphasized the government’s dedication to this comprehensive approach. The upcoming stablecoin ordinance is a cornerstone of Hong Kong’s updated digital asset agenda, “Policy Statement 2.0,” which was unveiled in late June and expands upon a framework initially introduced in October 2022. This policy outlines the “LEAP” framework, a strategic initiative focused on Legal streamlining, Expanding tokenized products, Advancing use cases, and People and partnership development.
Under the new regime, any entity intending to issue fiat-referenced stablecoins in Hong Kong will be required to obtain a license from the Hong Kong Monetary Authority (HKMA). A crucial component of these regulations, as detailed in official government documents, is the mandate for stablecoins to be fully backed by reserves of high-quality, liquid assets. This measure aims to safeguard investors and uphold financial stability.
Beyond stablecoins, Hong Kong is also making a concerted push for the tokenization of real-world assets (RWA). The government plans to regularize the issuance of tokenized government bonds and actively promote the tokenization of other assets, such as precious metals, to enhance liquidity and market accessibility. To facilitate this, the Financial Services and the Treasury Bureau, in collaboration with the HKMA, is conducting a legal review to streamline regulatory processes for tokenized instruments.
In a bid to further stimulate market development, authorities have clarified the stamp duty treatment for tokenized Exchange Traded Funds (ETFs) to encourage secondary market trading. Additionally, regulations are being drafted to introduce tax incentives on profits derived from specific blockchain activities.
The impending regime has already drawn interest from major players in the tech industry, with firms like Ant Group signaling their intent to apply for a stablecoin issuance license once the new framework is active.