Hong Kong Passes Stablecoin Bill to Regulate Digital Currency Issuers

Highlights:

• Hong Kong’s stablecoin bill establishes a licensing regime for stablecoin issuers.
• Issuers must meet stringent regulatory requirements, including reserve asset management and redemption mechanisms.
• Hong Kong aims to become a global leader in Web3 infrastructure through this legislation.

The Legislative Council in Hong Kong has passed the stablecoin bill, which will set up a system for regulating digital currency issuers. According to the law, fiat-referenced stablecoin issuers are required to receive licenses from the Hong Kong Monetary Authority.

The bill requires clear rules for how stablecoin reserves should be managed, assets should be held apart, and how coins can be redeemed. The operation of all issuers needs to be based on a structure that maintains value stability. Moreover, every licensee has to let stablecoin users redeem their holdings at a par value under reasonable conditions.

JUST IN: Hong Kong passes stablecoin bill to establish licensing framework amid global competition. pic.twitter.com/FwWcBHeqBA

— Whale Insider (@WhaleInsider) May 21, 2025

New Framework Focuses on Risk and Public Safety

The draft states that only licensed companies in Hong Kong may issue stablecoins or support related advertising campaigns. It introduces safeguards for the general public by blocking unauthorized promotions and preventing misleading advertising.

The rules for licenses are designed to include actions against financial crime. Issuers have to follow guidelines related to money laundering and countering financial terrorism. They are expected to use effective systems for managing risks, auditing and revealing information.

In addition, only stablecoins authorized by the framework will be open to retail clients. This is very different from past models that allowed only professionals to participate. In addition, the new licensing process will be put in place after the system takes effect this year.

Stablecoin Bill Strengthens Hong Kong’s Financial Sector

The stablecoin bill, according to authorities, boosts Hong Kong’s standard of regulatory guidelines. The measure matches global standards and enables the city to compete with others across the globe. Authorities also mentioned that they aim to ensure the financial system is stable and support the rise of new digital asset industries.

The Hong Kong Monetary Authority insisted on using a flexible and risk-based strategy. The regime makes sure there is responsible growth, confidence among investors and clarity in the market. Officials also shared that the framework helps keep up with technology developments and also protects users.

The government will soon hold consultations to introduce new services to support long-term development. Examples of regulations are for over-the-counter deals and custodial services. The second policy regarding digital assets from Hong Kong will soon be officially released.

Momentum Builds Around Digital Asset Regulation Globally

Hong Kong passing stablecoin bill aligns with other places that are also considering regulations. The United States Senate recently moved ahead with its own framework for stablecoins, called the GENIUS Act. Moreover, both areas are looking to give clear guidance for the developing cryptocurrency market.

Meanwhile, Hong Kong’s cryptocurrency industry is expanding as it follows a broader license regime. The government decided to regulate virtual asset trading platforms in 2023. As well, the sandbox saw participation from Standard Chartered, Animoca Brands, and telecom providers.

Lawmaker Johnny Ng said the stablecoin bill is a step forward in building the blockchain industry. He believes stablecoins can be used for real-world payments, handling supply chains and transactions between countries. Furthermore, he expects many companies will apply for licenses as the law comes into effect.

今天是全球Web3發展的里程碑，也是香港成為國際Web3中心的重要一步。很榮幸和大家分享今天香港特別行政區立法會已經三讀通過<穩定幣條例草案>，相信在今年底前各大機構可以在香港向金融管理局申請成為合規穩定幣發行商。香港穩定幣是以法定貨幣為底層資產，我們歡迎全球有意發行穩定幣的企業和機構來港… pic.twitter.com/dVJ4NnnhWA

— Johnny Ng 吴杰庄 (@Johnny_nkc) May 21, 2025

The HKMA is allowed by law to enforce compliance with all regulations. Further consultations will help improve the precise levels of reserves, what information needs to be presented and the level of protection offered to clients. The city’s Securities and Futures Commission also plays a role by overseeing the licensed exchanges.