Hong Kong Crypto Law Aug 1 2025 Criminalizes Unlicensed Stablecoin Promotions Fines Up to HK$50000 Jails 6 Months

Hong Kong’s government will enforce a new crypto law starting August 1, 2025, criminalizing unlicensed promotions and offerings of fiat-referenced stablecoins (FRS). The legislation, passed by the Legislative Council on May 21 under the Stablecoins Ordinance, grants the Hong Kong Monetary Authority (HKMA) authority to penalize non-compliant entities. Offenders face fines of up to HK$50,000 (approximately $6,300) and six months in prison for individuals or companies involved in unlicensed stablecoin activities [1]. The ordinance requires all fiat-backed stablecoin issuers to obtain HKMA approval, with tokens fully backed by fiat currency. Sections 9 and 10 of the law explicitly prohibit unlicensed offerings and advertising, emphasizing strict oversight to mitigate risks like fraud and speculative trading [2].

The HKMA has already warned of legal repercussions, stating that violations could result in reputational damage through public disclosure of sanctions. Administrative actions, including license suspensions or revocations, will be enforced based on the severity of infractions. HKMA Chief Executive Eddie Yue highlighted the need to “rein in the euphoria” around stablecoin-related market activity, criticizing many license applicants for vague proposals and inadequate risk management plans. He indicated that only a fraction of the over 50 firms expected to apply for licenses will likely be granted approval [3].

Among the applicants, state-backed institutions like Guotai Junan and ChinaAMC have emerged as key players. Guotai Junan’s shares surged 300% after it received a banking license extension in June, allowing digital asset operations. ChinaAMC launched a tokenized yuan money market fund accepting stablecoin subscriptions before formal licensing, reflecting growing interest in Hong Kong’s regulated crypto ecosystem [4]. The regulatory push aims to position Hong Kong as a digital asset hub, distinct from Mainland China’s crypto restrictions. Since 2022, the region has introduced measures like Bitcoin and Ether ETFs and licensed exchanges, custodians, and dealers to balance innovation with investor protection.

The ordinance’s implementation follows months of legislative debate, with lawmakers like Johnny Ng Kit-Chong noting that institutions will begin applying for licenses by year-end. Reserve requirements for issuers have been emphasized to ensure stability in the fiat-backed token market. However, stringent licensing criteria may limit access to well-established entities, raising concerns about market accessibility for smaller players [5].

Hong Kong’s approach differs from frameworks in the European Union and the U.K., which impose heavy fines but no criminal charges for noncompliance. The HKMA’s hybrid model combines licensing rigor with criminal penalties, reflecting a proactive stance on digital asset governance. While the initial focus is on curbing fraudulent activities, the long-term goal is to foster Web3 innovation. Yue’s warnings about speculative risks—citing recent surges in trading activity linked to stablecoin announcements—underscore the regulator’s prioritization of risk mitigation over rapid expansion [6].

Sources:

[1] [Hong Kong to criminalize unlicensed stablecoin activity from August](https://www.cryptopolitan.com/hong-kong-criminalize-unlicensed-stablecoin/)

[2] [HKMA Cautions Against Stablecoin Hype as New Ordinance Enforces](https://fintechnews.hk/34858/blockchain/hkma-stablecoin-ordinance-warning/)

[3] [Hong Kong To Enforce Stablecoin Licensing Rules Starting August 1](https://financefeeds.com/hong-kong-to-enforce-stablecoin-licensing-rules-starting-august-1/)

[4] [Hong Kong Enforces Stablecoin Ordinance Aug 1](https://www.ainvest.com/news/hong-kong-enforces-stablecoin-ordinance-aug-1-criminalizes-unlicensed-promotions-hk-50000-fines-6-month-jails-protect-investors-2507/)

[5] [Hong Kong's Crucial Stablecoin Regulations: A New Era Of Oversight](https://bitcoinworld.co.in/hong-kong-stablecoin-regulations/)

[6] [Hong Kong Declares Unlicensed Stablecoin Promotions a Crime](https://cryptonews.com/news/hong-kong-declares-unlicensed-stablecoin-promotions-a-crime-2/)