Catenaa, Monday, August 11, 2025- Hong Kong’s newly enacted stablecoin ordinance is drawing industry concern over strict customer identification requirements that critics say could slow adoption and weaken the city’s ambitions to be a global digital finance hub.
The law, which took effect August 1, makes Hong Kong one of the first jurisdictions to regulate fiat-backed stablecoin issuers.
However, its know-your-customer rules require issuers to verify the identity of every stablecoin holder, not just account holders, a move seen as limiting privacy and deterring overseas users.
The Hong Kong Monetary Authority said the measures are essential to combat money laundering and terrorism financing, noting that only a limited number of licences will be issued starting early next year.
Market analysts warned the rules could make cross-border use cumbersome, as recipients of regulated stablecoins may need Hong Kong-based accounts to complete KYC checks.
Analysts compared the framework to US rules under the recently signed GENIUS Act, saying Hong Kong’s approach is even more stringent.
Critics argued that near-complete real-name transactions could strip stablecoins of advantages such as speed and anonymity, potentially excluding unhosted wallet users.
Analysts expect the main regulated user base to be mainland Chinese firms conducting trade and remittance transactions. The regulation has already dampened investor sentiment, with shares of Hong Kong-listed firms linked to stablecoin ventures losing recent gains after the bill’s implementation.
