Hong Kong Imposes 100% Reserve Rule for Stablecoins to Curb Speculation and Boost Trust

Hong Kong has moved to solidify its position as a digital asset hub by enrolling a comprehensive regulatory framework for fiat-backed stablecoins on August 1, 2025. Under the new law, stablecoin operators must secure a license from the Hong Kong Monetary Authority (HKMA), and existing businesses were given until February 2026 to meet compliance requirements. The regulation mandates that stablecoins be 100% backed by highly liquid monetary assets, with the primary function of facilitating international payments and deterring speculative activities [1].

The introduction of the rules aligns with global efforts to standardize stablecoin regulation, particularly drawing inspiration from the EU’s Markets in Crypto-Assets (MiCA) framework. The law is seen as a move to attract responsible stablecoin issuers while reinforcing consumer protection and financial stability [2]. A Legislative Council member emphasized the importance of maintaining transparency and discouraging speculation, noting that the ordinance is not a competitive tool but a foundational measure to ensure long-term trust in the system [2].

The regulatory clarity has already begun to influence market dynamics. At least 10 listed Hong Kong fintech firms raised $1.5 billion in late July and early August through share placements, with funding directed toward stablecoin development and blockchain infrastructure. OSL Group, a blockchain and digital asset firm, closed a $300 million equity financing round in late July, signaling growing investor confidence [1].

The regulatory environment in Hong Kong mirrors broader regional and global trends. In South Korea, lawmakers have proposed a Digital Asset Basic Act to enable the legal issuance of won-backed stablecoins, reflecting a shared regional interest in non-dollar-pegged assets. Meanwhile, in the U.S., President Donald Trump signed the GENIUS Act in early July, aiming to create a structured legal framework for digital assets [1]. These parallel developments highlight the increasing convergence of stablecoin regulation across jurisdictions.

Hong Kong’s new regime covers critical operational aspects such as reserve asset management, anti-money laundering (AML) compliance, and redemption processes. These requirements reflect a strategy to mitigate risks associated with cross-border transactions and to ensure the system is robust before full deployment. Although no stablecoin issuer has been publicly licensed yet, major players such as JD.com and Ant Financial have reportedly expressed intentions to issue Hong Kong-dollar-backed stablecoins [5].

With its transparent and efficient regulatory model, Hong Kong is positioning itself as a competitive destination for global capital and technology firms. The city’s approach is expected to influence regulatory strategies across the Asia-Pacific region, where the need to balance innovation with oversight remains a central theme. While technical and policy challenges remain, the new framework marks a foundational step in legitimizing stablecoins as a utility-driven asset rather than a speculative one [7].