º¬Ðß²ÝÉçÇø

Balancing innovation with stability and protection, the Stablecoins Ordinance is set to take effect on 1 August 2025, aiming to position the special region as a global leader

With a global market capitalisation exceeding USD250 billion in 2025, stablecoins have become more integrated into global finance, facilitating cross-border payments, decentralised finance and digital asset trading. Designed to maintain a stable value by pegging to assets such as fiat currencies, stablecoins come with risks such as inadequate reserve backing.

To enhance the regulatory framework for digital asset activities and safeguarding monetary and financial stability, the Legislative Council passed the Stablecoins Bill on 21 May 2025, with the Stablecoins Ordinance confirmed to take effect on 1 August 2025.

The Stablecoins Ordinance requires issuers of fiat-referenced stablecoins in Hong Kong, or those pegged to the Hong Kong dollar (HKD) to be licensed by the Hong Kong Monetary Authority (HKMA).

This article provides an overview of the Stablecoins Ordinance, its key provisions, the HKMA¡¯s vision for stablecoin regulation, challenges and considerations for licence applicants, and a comparative analysis with global stablecoin regulations.

Overview

The Stablecoins Ordinance sets out a regulatory framework for activities relating to ¡°specified stablecoins¡±, while aligning Hong Kong¡¯s virtual assets regulatory framework with international standards under the ¡°same activity, same risks, same regulation¡± principle.

Specified stablecoins, as defined under section 4 of the Stablecoins Ordinance, are virtual assets used as a medium of exchange that maintain a stable value with reference to one or more official currencies, such as the HKD. Any entity engaging in the following activities must obtain a licence from the HKMA:

1. 1. Issuers issuing specified stablecoins in Hong Kong in the course of doing business;
   2. Issuing specified stablecoins outside Hong Kong that are pegged, wholly or partly, to the HKD; and
   3. Carrying out activities designated by the HKMA as ¡°regulated stablecoin activities¡±.

Key provisions

The Stablecoins Ordinance introduces a comprehensive regulatory framework for the issuance, offering and marketing of specified stablecoins. See key provisions in the table below.

The HKMA released consultation papers on 26 May 2025, outlining additional requirements, such as mandatory customer due diligence for transactions exceeding HKD8,000 and comprehensive anti-money laundering and countering the financing of terrorism (AML/CFT) controls, which further increase the compliance burden for applicants.

Regulatory vision

The HKMA emphasised a high licensing bar, viewing stablecoins as a means to effect blockchain-based payments rather than speculative instruments:

¡°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 ¨C taking cross-border payments as the use case ¨C include central bank digital currency networks established among central banks, tokenised deposits being explored by international banks, and the interlinkages of fast payment systems across jurisdictions.¡±

The HKMA views stablecoins as part of an evolving digital payment landscape, alongside central bank digital currencies, tokenised deposits and fast payment systems. The HKMA acknowledges inherent and spillover risks, particularly with increasing adoption, expecting to grant only a few licences to issuers demonstrating viable use cases, prudent operations and market trust, with aims to ensure the stability and reliability of HKD-backed assets.

Global regulations

Globally, stablecoin regulations are evolving rapidly, with jurisdictions such as the US, EU and Singapore adopting varied approaches. Please refer to the table below for a comparison of regulations in the US, EU, Hong Kong and Singapore as of 30 June 2025.

Hong Kong¡¯s Stablecoins Ordinance stands out for its clarity and specificity. Compared to the EU¡¯s MiCAR, which covers all crypto-assets, Hong Kong¡¯s focus on fiat-referenced stablecoins provides flexibility for issuers and avoids the broader compliance burdens for other crypto-assets.

Similarly, while Singapore¡¯s framework is innovation friendly, Hong Kong¡¯s detailed provisions, such as segregated reserves and a HKD25 million capital requirement, enhance regulatory certainty.

The Stablecoins Ordinance¡¯s alignment with international standards, combined with its tailored approach to HKD-pegged stablecoins, positions Hong Kong as a leading hub for stablecoin issuers, fostering fintech innovation while ensuring market stability and consumer protection.

It attracts issuers and investors, fostering fintech and decentralised finance (DeFi) innovation. Licensed institutions, such as banks and virtual asset trading platforms, gain opportunities to expand digital asset offerings, while retail investors benefit from restricted access to HKMA-licensed stablecoins, enhancing protection.

Conclusion

Hong Kong¡¯s Stablecoins Ordinance is a pivotal step in regulating digital assets, facilitating web3-based payments, and balancing innovation with stability and protection. Its targeted approach, stringent requirements and global influence position Hong Kong as a leader in stablecoin regulation, offering valuable lessons for jurisdictions worldwide. By enhancing market integrity and consumer confidence, the Stablecoins Ordinance solidifies Hong Kong¡¯s role as a competitive global financial centre.