Hong Kong to Regulate Stablecoins with 100% Reserve Mandate from August 1, 2025

Hong Kong authorities, led by the Financial Services and the Treasury Bureau, have confirmed the commencement of the Stablecoin Ordinance on August 1, 2025. This ordinance introduces a structured licensing regime for stablecoin issuers, aiming to provide robust regulatory guardrails for the stablecoin market. The ordinance mandates that stablecoin issuers maintain a 100% reserve, ensuring that the value of the stablecoin is fully backed by assets. This move is part of a broader effort to integrate stablecoins into the region's financial ecosystem, facilitating more use cases for these digital assets and other tokenized financial products.

The Stablecoin Ordinance aims to establish licensing requirements for stablecoin issuers, affecting both payment institutions and major technology companies. Experts predict that only 3 to 4 licenses will be granted initially, with a focus on HKD and USD-pegged stablecoins for regulatory clarity. This change will stop unlicensed stablecoins from trading on these platforms. Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury, emphasized the ordinance's role in providing robust regulatory guardrails for the stablecoin market. "After the Ordinance commences operation, the licensing regime will provide suitable guardrails for relevant stablecoin activities. It will be a milestone in facilitating the sustainable development of the stablecoin and digital asset ecosystem," Hui stated.

Market reactions have been muted, with limited public commentary from industry leaders. Regulatory clarity from Hong Kong is seen as pivotal for institutional engagement, though broader community reactions remain cautious as stakeholders assess the potential impacts. The ordinance's implementation is expected to have a significant impact on the global remittance landscape. Stablecoins have already shown their potential to reshape this sector, with transaction volumes surpassing those of traditional payment networks. The ordinance's stringent requirements for licensees, including the 100% reserve mandate, are designed to ensure the stability and reliability of stablecoins, making them a viable option for cross-border payments.

This move is part of a broader effort to integrate stablecoins into the region's financial ecosystem, facilitating more use cases for these digital assets and other tokenized financial products. The ordinance is also part of a larger digital-asset strategy aimed at addressing real-world financial challenges. By facilitating the use of stablecoins, the region hopes to lower remittance costs, speed up settlement times, and increase financial inclusion. Stablecoins offer protection from currency volatility and provide a compelling solution to long-standing challenges in the remittance landscape, such as high costs, delays, and limited financial access. This is particularly relevant for regions where remittances are a major economic lifeline.

More than 50 companies have expressed their intention to apply for stablecoin licenses once the ordinance comes into effect. This indicates a strong interest from the private sector in leveraging stablecoins for various financial services. The ordinance is expected to pave the way for the issuance of stablecoins pegged to the yuan, which could be integrated into the region's international capital markets. This development aligns with the broader strategy to support offshore digital RMB efforts and enhance the region's position as a global financial hub.