Hong Kong Implements Stablecoin Ordinance for Digital Asset Regulation

Hong Kong has taken a significant step in regulating the digital asset sector by implementing stringent guidelines for stablecoin issuers. The Hong Kong Monetary Authority (HKMA) has passed the Stablecoin Ordinance, which establishes a licensing regime for fiat-referenced stablecoin issuers. This ordinance is set to come into effect on August 1, 2025, marking a pivotal moment in the region's efforts to enhance its regulatory framework for digital asset activities.

Chief Executive at HKMA, Eddie Yue, emphasized that the Ordinance is designed to safeguard monetary and financial stability while strengthening Hong Kong’s status as an international financial center. The HKMA has been actively participating in international organizations, including the Financial Stability Board (FSB) under the G20, which published the “Global Regulatory Framework for Crypto-Asset Activities” in 2023. This framework provides a set of guiding international standards for the regulation of stablecoins, on which Hong Kong’s regulatory regime is largely based.

The Stablecoin Ordinance adopts the principle of ‘same activity, same risk, same regulation,’ ensuring alignment with international standards while adapting to local circumstances. This approach provides proper safeguards against financial stability risks and money laundering, promotes investor protection, and lays a solid foundation for the industry’s sustainable development. The HKMA plans to set a high bar for licensing, considering the need for user protection, market capacity, and long-term development. Only a handful of licenses are expected to be granted in the first phase, with the agency being cautious in considering license applications.

Participation in the HKMA’s Stablecoin Issuer Sandbox, launched early last year, is not a prerequisite for receiving a license, nor is it a guarantee for one. The HKMA will carefully evaluate each application, ensuring that only those meeting the stringent criteria will be granted licenses. The question of how stablecoins will operate alongside Central Bank Digital Currencies (CBDCs) and bank-issued tokens remains unresolved, but the HKMA aims to promote the responsible and sustainable development of digital assets in Hong Kong, consolidating the city’s role as an international financial center.