Hong Kong Announces Stablecoin Regulations Effective August 1 2025

The Hong Kong government has announced that its new stablecoin regulations will come into effect on August 1, 2025. This move is part of the region's efforts to regulate activities involving stablecoins and to introduce a licensing regime for relevant stablecoin activities. The Stablecoins Ordinance, which was gazetted on May 30, aims to provide a framework for the sustainable development of the stablecoin and digital asset ecosystem in the region.

The new regulations will require issuers of stablecoins to obtain licenses from the Hong Kong Monetary Authority. This licensing regime is designed to ensure that all activities involving stablecoins are properly regulated, thereby promoting the sustainable development of the stablecoin and digital asset ecosystem. Secretary for Financial Services and the Treasury Christopher Hui emphasized that the ordinance marks a significant milestone in this development.

The ordinance outlines several key requirements for stablecoin issuers. These include proper management of reserve assets, maintaining a robust stabilization mechanism, and processing stablecoin holders’ requests for redemption at par value with reasonable conditions. Additionally, compliance with anti-money laundering and counterterrorist financing regulations, risk management, disclosure and auditing, as well as fitness and propriety standards, will be mandatory.

The Hong Kong Monetary Authority has launched a consultation on the detailed regulatory requirements of the regime, including provisions related to anti-money laundering and the counter-financing of terrorism. The notice will be tabled before the Legislative Council for negative vetting on June 11. This process is part of the pre-formulation and post-vetting stages for the stablecoin bill, which will help ensure that the regulations are comprehensive and effective.

A transitional arrangement will be provided to facilitate the industry in applying for a license and making suitable business arrangements in accordance with the regulatory regime. This transitional period will allow stablecoin issuers to adapt to the new requirements and ensure compliance with the licensing regime. The new regulations also contain a clause that regulates qualified investors, granting them the ability to issue stablecoins even if they do not hold a license yet. However, it is still unclear whether retail investors will have to abide by certain requirements dictated by financial regulators in order to issue their own stablecoins.

The new licensing regime will also limit stablecoin advertisements to licensed issuers in an effort to prevent scams. This move is part of the government's efforts to ensure that all activities involving stablecoins are properly regulated and to promote the sustainable development of the stablecoin and digital asset ecosystem in the region. The government will provide clear guidelines for industry players interested in delving into the stablecoin market, ensuring that they are aware of the requirements and regulations that they need to comply with.