Hong Kong Imposes Mandatory Stablecoin Licensing Under New Ordinance

Hong Kong’s stablecoin market is undergoing a significant transformation as the Stablecoins Ordinance (Cap. 656) took effect on August 1, 2025, introducing a mandatory licensing system under the Hong Kong Monetary Authority (HKMA). The ordinance seeks to enhance financial stability, uphold market integrity, and align with global anti-money laundering (AML) and counter-terrorist financing (CTF) standards [2]. The new framework requires stablecoin issuers targeting the Hong Kong market to obtain a license, with the process initially operating on an invitation-only basis [2]. The HKMA has not yet released public application forms and is engaging directly with potential applicants to assess their readiness and business models [2]. Licensing requirements include robust reserve asset management, cybersecurity protocols, and compliance with AML/CFT regulations [2].

The impact of the new rules has already been evident in market reactions. In early July, shares of companies involved in stablecoin operations in Hong Kong experienced sharp declines, with some stablecoin-linked stocks dropping over 20% amid regulatory uncertainty and concerns over compliance costs [3]. However, industry analysts argue that these drops represent a short-term correction rather than a long-term decline [1]. The licensing framework is widely seen as a step toward stabilizing the market and restoring investor confidence by promoting transparency and accountability [1]. A three-month transitional period, ending January 31, 2026, has been introduced for existing stablecoin issuers who have not yet received an invitation to apply for a license, allowing them to continue operations under specific conditions [2].

The regulatory changes extend beyond issuers to include distributors and intermediaries, who must now comply with stringent offering requirements. Effective August 1, only permitted offerors can legally distribute specified stablecoins in the region [2]. This has triggered a wave of activity among banks and brokers to align their operations with the new regulations, with some institutions exploring licensing opportunities to remain competitive [4]. The HKMA has also indicated plans to issue further guidance on key definitions, including the term “offering” and the treatment of stablecoins issued by non-licensed entities [2].

While the new regulations reflect a tightening of the regulatory environment, they are also seen as an opportunity to foster a more structured and transparent stablecoin ecosystem in Hong Kong. The licensing model is expected to attract players with strong financial and technological capabilities, creating a more resilient and scalable market [5]. The industry is closely monitoring the first wave of licenses, expected to be issued in 2026, as a key indicator of how the regulatory framework will influence competition and innovation [6].

The implementation of the Stablecoins Ordinance represents a pivotal shift in Hong Kong’s virtual asset landscape, reinforcing the region’s commitment to responsible financial innovation [2]. As the market adjusts to the new licensing regime, stakeholders are advised to closely review the requirements and prepare for continued regulatory developments in the coming months [2].

Source:

[1] https://cointelegraph.com/news/hong-kong-stablecoin-stocks-new-rules-experts

[2] https://www.lexology.com/library/detail.aspx?g=b82fca1c-2234-4d8a-a6c3-b94fa2ad4a08

[3] https://www.ainvest.com/news/hong-kong-stablecoin-stocks-drop-20-regulatory-tightening-market-correction-2508/

[4] https://beincrypto.com/hong-kong-opens-stablecoin-licensing-banks-and-brokers-rush-in/

[5] https://www.chinadailyhk.com/article/617115

[6] https://coinpedia.org/news/hong-kong-launches-tough-stablecoin-rules-as-1-5b-pours-into-crypto-startups/