On May 21, 2025, Hong Kong's Legislative Council officially passed the Stablecoin Ordinance Draft, marking a significant milestone in the region's virtual asset market. The new regulation introduces a licensing framework for fiat-backed stablecoin issuers, balancing financial stability with technological innovation. Authorities welcomed the move, emphasizing its role in maintaining Hong Kong's leadership in the global virtual asset race.
Stablecoins Under Regulation: Issuers Must Obtain Licenses
Under the new ordinance:
- Any entity issuing fiat-backed stablecoins in Hong Kong, or issuing港元-pegged stablecoins locally/globally, must apply for a license from the Hong Kong Monetary Authority (HKMA).
- Strict rules govern asset reserves, redemption mechanisms, risk management, disclosure, and anti-money laundering (AML) protocols.
- Issuers must honor redemption requests at face value under reasonable conditions and implement asset segregation.
- Applicants must demonstrate robust governance and audit frameworks.
Boosting Market Confidence: Only Licensed Stablecoins Permitted for Retail
Key retail-facing rules:
- Only licensed stablecoins can be marketed to retail investors.
- Advertising restrictions tighten, permitting only approved stablecoin-related promotions.
- A six-month transition period allows compliance adjustments.
This safeguards investors while fostering public trust in virtual assets. The government urges vigilance against scams.
Government Perspective: Innovation Paired with Regulation
Financial Secretary Christopher Hui stated:
"The ordinance aligns with 'same activity, same risk, same regulation' principles, meeting international standards while reinforcing Hong Kong’s status as a financial hub."
HKMA Chief Executive Eddie Yue added:
"The risk-based, pragmatic framework supports sustainable growth for Hong Kong’s digital asset ecosystem."
Implementation Timeline and Transition Period
The ordinance takes effect in 2025, with a transition period for industry adaptation. Businesses can plan licensing applications and operational adjustments accordingly.
Next Steps: OTC and Custody Services in Focus
With stablecoin and exchange regulations progressing, the government will next consult on regulating:
- Over-the-counter (OTC) virtual asset trading
- Asset custody services
A second policy manifesto on virtual asset development is also forthcoming.
FAQ Section
Q1: What types of stablecoins require licensing in Hong Kong?
A: Fiat-backed stablecoins issued locally or港元-pegged stablecoins issued globally must obtain a license.
Q2: Can retail investors still trade unlicensed stablecoins?
A: No. Only licensed stablecoins can be marketed to retail users post-transition period.
Q3: How does the ordinance protect investors?
A: It mandates transparency, asset segregation, and redemption guarantees while curbing misleading ads.
Q4: What’s next after stablecoin regulation?
A: OTC trading and custody services will face scrutiny, with consultations expected soon.
Q5: How long is the transition period?
A: Six months, allowing businesses to align with new requirements.
👉 Explore Hong Kong’s virtual asset regulations
👉 Learn about compliant stablecoin issuance
Risk Disclosure
Cryptocurrency investments carry high volatility and risk. You may lose all capital—assess risks carefully.