August 1, 2025, a date worth noting for all participants in the cryptocurrency market. On this day, the Hong Kong (Stablecoin Regulation) (Chapter 656) will officially take effect. This marks not only a key milestone in Hong Kong's financial regulatory history but also signifies the arrival of a new phase in the integration of crypto assets with the traditional financial system.
For cryptocurrency practitioners, regardless of whether you are in Hong Kong, this policy serves as a barometer: stablecoins, especially those pegged to fiat currency, will become the core entry point for global regulation.
So, what is a stablecoin? What is a 'fiat-backed stablecoin'? What impacts will this regulatory experiment led by Hong Kong bring? This article will clarify them one by one.
1. What exactly is a stablecoin?
In simple terms, stablecoins are a class of crypto assets with stable prices, usually pegged to fiat currencies, gold, or a basket of assets, maintaining price stability through reserve mechanisms or algorithms.
Their mission is to address the shortcomings of highly volatile assets like Bitcoin in payments—you can't use an asset that might fluctuate by 20% daily to settle salaries or buy groceries, right?
There are three main types of stablecoins:
Fiat-collateralized (like USDC, USDT): Issued by centralized institutions, pegged 1:1 to the US dollar, backed by real bank deposits and bond reserves.
Crypto-collateralized (like DAI): Over-collateralized with crypto assets like ETH, maintaining the peg through smart contracts.
Algorithmic stablecoins (like the collapsed UST): No asset reserves, relying on algorithms to adjust supply and demand—extremely high risk, many have failed.
Among them, fiat-backed stablecoins are currently the most popular and compliant category, backed by real fiat currency, stable in price, and with a clear redemption mechanism, becoming the infrastructure for exchanges, cross-border settlements, DeFi platforms, and more.
2. Why does Hong Kong need to issue (Stablecoin Regulation)?
On May 30, 2024, the Hong Kong government officially passed the (Stablecoin Regulation) and set the official effective date in early June: August 1, 2025. This is not a symbolic legislation, but the beginning of constructing a systematic regulatory framework.
The core spirit of the regulation has three points:
Clearly defines stablecoins as payment tools rather than securities, establishing their position within the fiat currency system.
Implementing a licensing system, any stablecoin claiming to be pegged to the Hong Kong Dollar, regardless of whether it is issued in Hong Kong, must be licensed if it involves the Hong Kong market.
100% reserve guarantee + high barrier to entry mechanism to ensure financial safety.
This means that in the future, if you want to issue a stablecoin pegged to the Hong Kong Dollar in Hong Kong, you must have a minimum paid-in capital of HKD 25 million, 100% asset custody proof, and a redemption mechanism. Advertising will also be strictly limited, with only licensed institutions allowed to promote publicly.
3. How does it differ from other countries or regions?
Hong Kong has pioneered the 'Value Pegging Regulation' principle, where any stablecoin pegged to the Hong Kong Dollar will fall under regulatory oversight, featuring a 'penetrating' regulatory characteristic.
The EU adopts a 'function-oriented' regulation, focusing on categorizing and tiering regulation for different crypto asset functions under the MiCA framework, applicable to 27 countries and three EEA countries.
Singapore employs a tiered licensing system, encouraging the development of small and medium-sized fintech companies, with more flexible regulation.
The U.S. continues to use a federal + state dual-track system, suffering from severe regulatory fragmentation, but is tightening regulation on super-large stablecoin projects.
It can be seen that Hong Kong's regulatory framework is more focused on local currency sovereignty protection + balancing technological innovation, with a clear and forward-looking regulatory mindset.
4. Can the Digital Renminbi and Hong Kong Dollar stablecoin interact?
In fact, although the two are positioned differently, they do not conflict; rather, they possess strong complementarity:
Digital Renminbi: Issued by the state and backed by sovereign credit, it is more suitable for retail payments and livelihood scenarios, and has been supported for use with 'Faster Payment System' in Hong Kong.
Hong Kong Dollar Stablecoin: Issued by institutions and based on on-chain technology, it has a native on-chain property, more compatible with DeFi, NFT, supply chain finance, and other Web3 application scenarios.
In the future, regarding 'cross-border payments' and 'trade settlements', the Digital Renminbi will be responsible for 'connecting the main trunk', while the Hong Kong Dollar stablecoin will be active at the 'branches', constructing a hybrid multi-layered payment network structure, which is expected to become a model of cooperation between global central banks and crypto institutions.
What does Mlion.ai think?
We observe that the introduction of Hong Kong's (Stablecoin Regulation) essentially opens the pathway for institutional-grade stablecoin financial infrastructure. Against a backdrop of tightening global regulations, stablecoins are becoming the preferred bridge for compliant capital to enter and exit the Web3 ecosystem.
With Mlion.ai's on-chain address analysis tool, you can track in real-time the issuance addresses, custody behavior, and fund flows of stablecoins pegged to the Hong Kong Dollar or US Dollar, identifying whether they have real reserve support. Additionally, the deep analysis feature can help you foresee the impact of major regulatory changes on market liquidity before policies are implemented.
Furthermore, through the Mlion.ai data dashboard, you can comprehensively monitor key metrics such as on-chain supply changes, net inflows/outflows, and exchange inventory ratios for mainstream stablecoins like USDT, USDC, and DAI, helping you assess capital sentiment and market risk, thus avoiding blind participation in 'falsely pegged' stablecoin projects.
Summary:
Stablecoins are becoming the connectors of the global financial system, and Hong Kong's pioneering step in stablecoin regulation may play a dual role as a 'regulatory model + innovation engine' in the Asian market. Stablecoins are no longer just tools for DeFi but bridges between traditional finance and Web3. In the coming months, multiple Hong Kong Dollar stablecoin projects may emerge, and whoever can find a balance between compliance and efficiency will gain an advantage.
You might want to open Mlion.ai, activate the 'Stablecoin Intelligence Radar', and at this critical juncture of regulation and technology, let data speak and get ahead.
Disclaimer: This article is for information sharing only and does not constitute any investment advice. Investment in crypto assets carries high risks; please ensure proper risk management.