Catenaa, Monday, August 04, 2025-Hong Kong’s Stablecoin Bill officially took effect August 1, introducing a licensing regime requiring all fiat-referenced stablecoin issuers pegged to the Hong Kong dollar or foreign currencies to obtain authorization from the Hong Kong Monetary Authority.
The new law mandates licensed entities to maintain adequate reserve asset management, segregate client funds, operate stabilization mechanisms, and fulfill redemption requests at par value under reasonable conditions.
Anti-money laundering, counter-terrorist financing, risk management, disclosure, and auditing standards are also enforced under the regime.
Only licensed institutions may issue or sell fiat-referenced stablecoins in Hong Kong, and retail investors are limited to tokens from approved issuers.
Advertising unlicensed stablecoins is prohibited, including during a six-month transition period to prevent fraud.
Hong Kong joins a small group of financial hubs with a formal stablecoin regulatory framework, aiming to reduce systemic risk and protect consumers while fostering greater institutional participation.
However, smaller firms may face challenges due to high compliance costs, potentially concentrating issuance among larger players.
The regime also positions Hong Kong to compete with global financial centers such as the U.S. and Singapore, enhancing cross-border cooperation and capital flows. With U.S. dollar-backed stablecoins dominating the global market, Hong Kong’s licensing framework could support the growth of HKD- and offshore CNY-pegged stablecoins as viable alternatives in Asian settlement markets.
