Hong Kong Criminalizes Unlicensed Stablecoin Promotions in New Ordinance Effective August 1 to Regulate Digital Assets and Curb Speculation

Hong Kong has enacted a legal framework to criminalize unlicensed stablecoin promotions, marking a significant step in its bid to regulate the digital asset sector while curbing speculative fervor. The new Stablecoins Ordinance, effective August 1, introduces strict licensing requirements and reserve mandates for stablecoin issuers, targeting risks associated with market manipulation and fraud. Under the rules, only licensed entities will be permitted to offer fiat-referenced stablecoins (FRS) to the public, with unlicensed promotions restricted to professional investors. The Hong Kong Monetary Authority (HKMA) emphasized that this measure aims to protect retail investors from “frothy” market behavior and ensure the stability of the financial system [1].

The regulatory shift follows a surge in interest from firms seeking to establish stablecoin operations in Hong Kong. Over 40 companies, including Ant Group, JD.com, Standard Chartered, and Circle, have engaged with regulators, though many proposals remain in early stages. Eddie Yue, HKMA’s chief executive, warned that applicants may face disappointment, noting that some listed companies have used stablecoin announcements to artificially inflate stock prices. “Investors should remain calm and exercise independent judgment,” he cautioned, highlighting the need for rigorous due diligence [2].

The ordinance mandates that stablecoins be fully backed by high-quality, liquid reserves—such as cash, bank deposits, or government bonds—held in trust and segregated from company assets. This structure is designed to mitigate insolvency risks and prevent misuse of reserves. Additionally, a licensing regime will cover both issuers and service providers, with initial approvals expected later this year. The HKMA plans to release supervisory and anti-money laundering guidelines by July, signaling a proactive stance on compliance [3].

Globally, Hong Kong’s move aligns with broader regulatory trends. The Bank for International Settlements has raised concerns about stablecoin-related money laundering and cross-border risks, while the U.S. recently passed its own stablecoin legislation. By imposing stringent safeguards, Hong Kong positions itself as a cautious yet competitive hub for digital assets. However, Yue acknowledged that tighter regulations could temper short-term growth, stating, “More stringent requirements will inevitably limit the room for stablecoin businesses to scale rapidly” [4].

The HKMA will publish an explanatory note on license application procedures, offering clarity to market participants. As the deadline for the ordinance’s implementation approaches, firms are advised to refine their proposals and address gaps in risk management and technical capabilities. The regulator’s focus on stability and investor protection underscores a balanced approach to fostering innovation while maintaining financial integrity [5].

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