Hong Kong Enforces Stablecoin Ordinance Aug 1 Criminalizes Unlicensed Promotions with HK$50000 Fines and 6-Month Jails to Protect Investors

Hong Kong will enforce its Stablecoin Ordinance on August 1, criminalizing the promotion or offering of unlicensed fiat-referenced stablecoins (FRS) to retail investors. Under the law, violations could result in fines up to HK$50,000 (about $6,300) and imprisonment for up to six months, marking a stringent regulatory approach to protect investors and stabilize the market [1]. The Hong Kong Monetary Authority (HKMA) has issued warnings urging investors to avoid unlicensed products, emphasizing the risks of fraud and speculative price surges linked to unregulated stablecoin activity [2]. HKMA Chief Executive Eddie Yue highlighted that the regulation addresses a “market frenzy” fueled by hype around stablecoin announcements, which has led to inflated valuations and trading volumes [3].

The ordinance mandates licensing for stablecoin issuers and promoters, with Yue noting that many proposals submitted to the HKMA lack concrete plans, technical expertise, and risk management capabilities [4]. While over 50 companies have applied for licenses—such as Guotai Junan, which saw a 300% stock surge after securing a digital assets license—most applicants are expected to face rejection due to inadequate preparation [5]. Yue stressed that only a “handful” licenses will be granted initially, underscoring the high operational and compliance standards required.

The regulation aligns Hong Kong with global frameworks like the EU’s Markets in Crypto-Assets (MiCA) and Japan’s 2022 legislation, which prioritize licensing and consumer protection. However, Hong Kong’s approach is stricter, incorporating criminal penalties alongside financial fines [6]. In contrast, the UK’s Financial Conduct Authority has struggled with enforcement, with only half of illegal crypto ads removed as of January. By criminalizing unlicensed promotions, Hong Kong aims to deter scams and mitigate systemic risks, such as stablecoin de-pegging events that erode trust in the asset class [7].

For investors, the law narrows choices to licensed platforms, which are likely to offer clearer disclosures about reserve management and operational safeguards [8]. Retail investors are advised to avoid unregulated products to prevent unintentional legal violations. While the regulation may temporarily reduce retail access to stablecoins, it is expected to foster long-term trust among institutional investors and traditional financial institutions.

The August 1 enforcement date leaves little room for delay, requiring entities in the stablecoin space to either secure licenses or exit the market. This move positions Hong Kong as a leader in balancing innovation with risk mitigation, reinforcing its reputation as a structured crypto hub. By addressing gaps in consumer protection and market integrity, the city aims to attract capital while safeguarding its financial ecosystem from unregulated crypto risks [9].

Source: [1] [Hong Kong to Enforce Stablecoin Ordinance Starting Aug. 1] [https://cointelegraph.com/news/hong-kong-stablecoin-law-august-2025]

[2] [Hong Kong Criminalizes Unlicensed Stablecoin Marketing ...] [https://www.ainvest.com/news/hong-kong-criminalizes-unlicensed-stablecoin-marketing-starting-august-1-protect-retail-investors-2507/]

[3] [Hong Kong to criminalize unlicensed stablecoin ...] [https://www.tradingview.com/news/cointelegraph:0c97addd1094b:0-hong-kong-to-criminalize-unlicensed-stablecoin-promotions-from-aug-1/]

[4] [Hong Kong Criminalizes Unlicensed Stablecoin ...] [https://www.ainvest.com/news/hong-kong-criminalizes-unlicensed-stablecoin-promotions-retail-investors-imposes-fines-hk-50000-6-month-jails-august-1-2507/]

[5] [Hong Kong to Criminalize Unlicensed Stablecoin ...] [https://www.bitget.com/news/detail/12560604878799]

[6] [A BTC address dormant for 14.5 years has been activated ...] [https://www.bitget.com/news/detail/12560604878804]

[7] [BTCUSD - Hong Kong to criminalize unlicensed stablecoin ...] [https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96489889/hong-ong-to-criminalize-unlicensed-stablecoin-pro]

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

[9] [Hong Kong to Criminalize Unlicensed Stablecoin Promotions ...] [https://www.cryptonsole.com/hong-kong-to-criminalize-unlicensed-stablecoin-promotions-starting-august-1/]