- In May 2025, the Legislative Council passed the Stablecoins Ordinance, establishing a licensing regime for fiat-referenced stablecoin issuers in Hong Kong. The Ordinance marks a key step in enhancing the regulatory framework for digital asset activities, safeguarding monetary and financial stability, as well as strengthening Hong Kong’s status as an international financial centre. The Ordinance is expected to come into effect on 1 August 2025, after which the HKMA will begin accepting licence applications. Currently, the HKMA is conducting industry consultation on the detailed implementation guidelines for early adoption.
Latest international developments
- Meanwhile, there are notable developments elsewhere. The European Union implemented the Markets in Crypto-Assets (MiCA) regulation in 2024, and the United States is making good progress in legislative work to regulate stablecoins. Furthermore, a major stablecoin issuer went public in the US in early June, with significant rise in its stock price after the listing. The term “stablecoin” has drawn immense interest beyond the crypto community, extending into the financial sector and the broader community. There is extensive media coverage that shares basic knowledge about stablecoin and discusses possible use cases, potential disruption to traditional payment means, and even strategic implications.
- As the regulator of stablecoin issuers, while we welcome the public’s interest in stablecoins, we are also duty bound to sound a word of caution that enables more balanced discussions. The functions and potential benefits of stablecoins have been extensively covered throughout the legislative process, and public understanding about the subject has been further enhanced through recent discussions. I will therefore focus on how we look at the risks associated with stablecoins, as well as our approach for the regulation and licensing of stablecoin issuers.
- A stablecoin is not an investment or speculative instrument, but rather a type of blockchain-based payment means. By nature, it has no room for appreciation. Stablecoin is just one of the various emerging payments options that – taking cross-border payments as the use case – include central bank digital currency (CBDC) networks established among central banks, tokenised deposits being explored by international banks, and the interlinkages of fast payment systems across different jurisdictions. Each of them has its own merits with varying degree of maturity. Their growth potential will be determined largely by market forces.
- As the interface connecting traditional finance and digital assets, stablecoin presents inherent and spillover risks. The effective management of such risks is becoming a focal point for global regulators, particularly with the anticipated increasing adoption of stablecoin. The HKMA has been actively participating in the work of international organisations, including the Financial Stability Board (FSB) under the G20, which published the “Global Regulatory Framework for Crypto-Asset Activities” in 2023. The framework provides a set of guiding international standards for the regulation of stablecoins, on which Hong Kong’s regulatory regime is largely based.
- The HKMA is currently coordinating the FSB’s review of the implementation of the framework across the globe. As an emerging financial instrument, stablecoin possesses both attributes of traditional financial assets and certain distinct features, such as anonymity and ease of cross-border use, posing challenges in terms of risk management, particularly in the area of anti-money laundering. Sharing of regulatory experiences and cross-border cooperation among international peers will therefore be conducive to fostering proper risk management and the orderly development of stablecoins globally.
Licensing regime for stablecoin issuer
- As an international financial centre, Hong Kong is among the first jurisdictions to put in place a regulatory framework for stablecoin issuers. The Stablecoins Ordinance adopts the principle of “same activity, same risks, same regulation”, ensuring alignment with international standards while adapting to local circumstances. It provides proper safeguards against financial stability risks and money laundering, promotes investor protection, and lays a solid foundation for the sustainable development of the industry.
- Considering the novelty and potential risks of stablecoin, the need for user protection, market capacity and long-term development, we expect to set a high bar for licensing. It is envisaged that only a handful of licences will be granted initially. Stablecoin issuers to be licensed must demonstrate viable use cases and the ability to operate in a prudent and sustainable manner as well as command the trust of market participants, with a view to promoting the credibility of their stablecoin.
- From the perspective of regulatory compliance, stablecoin issuers must demonstrate adequate capabilities and experience across a range of areas. These include the management and security of reserve assets, effective price stabilisation mechanisms, comprehensive and feasible redemption policies, as well as capabilities in technological security, risk management, and anti-money laundering. Where cross-border activities are involved, applicants are also expected to develop a comprehensive compliance plan, demonstrate their financial strength, and ensure that they and their business partners have the necessary regulatory approvals and will comply with applicable regulations in Hong Kong and other relevant jurisdictions.
- In terms of market development, the sustainability of a stablecoin scheme is dependent on multiple factors including user base, use cases, partnerships, and the interest rate environment. To promote responsible and sustainable development, an applicant is expected to have a robust business plan and the necessary technical and financial resources to sustain its operations. Specifically, an applicant must articulate how its stablecoin scheme would effectively address pain points in economic and financial activities. It should also have a clear plan, backed by commensurate resources and compliance capability, to maintain a sufficiently large user base to ride out market fluctuations.
- The HKMA launched the “Stablecoin Issuer Sandbox” early last year to understand the business models of institutions planning to issue stablecoins in Hong Kong, and to communicate regulatory expectations and provide guidance. It should however be noted that participation in the sandbox is not a prerequisite for receiving a licence, nor is participation a guarantee for licence. We will adopt a cautious approach in considering licence applications under a set of common and robust standards.
- Hong Kong is seeking to establish a regulatory regime that reflects local circumstances and aligns with international standards and practices. We hope to promote the healthy, responsible and sustainable development of digital assets in Hong Kong, which will in turn consolidate the city’s role as an international financial centre. As major overseas jurisdictions press ahead with their regulatory frameworks for stablecoins, we will continue to collaborate with our global peers to foster financial stability and innovation.
Eddie Yue
Chief Executive
Hong Kong Monetary Authority
23 June 2025
