Hong Kong Passes Stablecoin Bill, Sets 2024 Licensing Deadline

Coin WorldWednesday, May 21, 2025 6:20 pm ET
1min read

The Legislative Council of Hong Kong has passed the Stablecoin Bill in its third reading, marking a significant step towards regulated stablecoin issuance in the region. This legislation requires stablecoins to be backed by fiat currency, establishing a licensing framework designed to attract global issuers. According to a post from the Hong Kong Legislative Council and National Committee of the Chinese People’s Political Consultative Conference member Johnny Ng, institutions will be able to apply for licenses with the Hong Kong Monetary Authority (HKMA) before the end of 2024.

Ng described the bill’s passage as “a milestone in the global development of Web3” and highlighted Hong Kong's position as a regional hub for regulated digital asset issuance. He emphasized that Hong Kong’s stablecoins are backed by fiat currency as underlying assets, welcoming global enterprises and institutions interested in issuing stablecoins to apply in Hong Kong. Ng also called for industry-wide efforts to develop stablecoin use cases, citing physical retail, cross-border trade, and peer-to-peer payments as potential areas for application. He proposed allowing interest generated from stablecoin reserves to be distributed to holders, suggesting that such incentives could increase participation and competitiveness in the market. Ng invited institutions interested in stablecoin issuance to contact him directly, offering to help connect applicants with relevant stakeholders.

The HKMA is expected to release additional licensing guidelines in the coming months. This effort to create a compliant stablecoin framework comes amid increased scrutiny of fiat-backed digital assets in other jurisdictions. Hong Kong’s framework offers stablecoin issuers a defined path to compliance, setting it apart from jurisdictions where regulatory approaches are still unclear. It also indicates a shift toward treating fiat-backed digital assets as part of mainstream financial infrastructure. The handling of interest payments to holders may test how closely stablecoins can resemble traditional savings products, and how authorities respond could shape not just market behavior but also the regulatory tone across Asia.

This new legal framework gives Hong Kong a first-mover advantage in Asia’s race to regulate fiat-backed stablecoins under a unified licensing model. The effort arrives amid global hesitation, with major economies still weighing how to incorporate stablecoins into existing financial rules. Licensing clarity could attract both crypto-native firms and traditional financial institutions seeking structured entry into digital asset issuance. Banks and payment firms may now explore stablecoin issuance under a clear regulatory umbrella, allowing them to compete with crypto-native issuers on more equal footing. Allowing stablecoins to pay interest blurs the line between tokenized money and deposit-like instruments, raising new regulatory and monetary policy considerations. Issuers targeting Asian users may begin routing activity through Hong Kong, prompting other jurisdictions to accelerate their own licensing efforts.