Author: Louis , ChainCatcher
Editor: Encrypted Luo Xiaohe, ChainCatcher
On May 21, 2025, the Hong Kong Stablecoin Regulation was officially passed through the third reading of the Legislative Council, becoming the first comprehensive stablecoin regulatory framework in the Asia-Pacific region. According to the regulation, all stablecoin projects issued in Hong Kong or pegged to the Hong Kong dollar must obtain a license from the Hong Kong Monetary Authority (HKMA). The regulation is expected to be officially implemented by the end of the year, and stablecoin issuers will be able to apply for licenses and enter the licensed operational phase. On the same day, Hong Kong Legislative Council member Wu Jiezhuang stated on social media: "Today is a milestone in global Web3 development and an important step for Hong Kong to become an international Web3 center!"
Despite numerous in-depth analyses, many readers still find it difficult to quickly understand the core content of the bill and its market impact. This issue of "CC Looks at the World" brings together multiple perspectives to help readers sort out the key points and implications of the Hong Kong dollar stablecoin regulation.
Development Review of the Stablecoin Bill
This year, stablecoins have rapidly developed due to their advantages of efficient transfers, low costs, and information transparency, with a market value rising to $247.48 billion, predominantly dollar-pegged products. However, during its rapid expansion, stablecoins have exposed three core issues: first, non-transparent reserve assets (such as USDT's revealed insufficient reserves); second, fragile algorithmic mechanisms (like the UST/LUNA system nearly zeroing out during its collapse); third, excessive dependence on traditional financial institutions (such as USDC's de-pegging due to Silicon Valley Bank's failure). These risks have prompted countries to accelerate stablecoin regulatory legislation. Against this background, the Hong Kong government officially published the Stablecoin Regulation Draft in the Gazette on December 6, 2024, initiating the legislative process. After completing the first reading on December 18, 2024, the regulation was successfully passed through the third reading in just five months on May 21, 2025, demonstrating the efficiency and determination of policy promotion.
Core Points of Hong Kong's Stablecoin Bill
The bill aims to establish a comprehensive regulatory framework for stablecoins to enhance transparency, prevent systemic risks, and protect investor interests. The bill advocates for fiat-backed stablecoins and includes the following core requirements:
- Mandatory Licensing: All issuers must obtain an HKMA license.
- Local Entity Requirements: Issuers must be registered in Hong Kong with a paid-up capital of at least HK$25 million
- 1:1 Reserves: Stablecoins must be fully backed by high-quality, highly liquid assets consistent with the pegged currency.
- Asset Isolation: Customer assets must be separated from company assets to prevent misappropriation.
- Redemption Mechanism: Holders can redeem at face value under reasonable conditions
- Compliance Obligations: Including anti-money laundering, risk management, auditing, and information disclosure
- Advertising Restrictions: Only licensed stablecoins can be promoted to the public to prevent fraud.
Unlike the U.S. GENIUS Bill's dual federal and state regulatory structure, the Hong Kong bill is regulated by a single HKMA agency. It does not mandate reserve assets to be cash or short-term government bonds, nor does it explicitly prohibit stablecoin interest payments. This reflects Hong Kong's pragmatic regulatory approach focused on financial innovation and practical application.
Unlike Singapore's MAS SCS Framework, which adopts a voluntary participation system, Hong Kong's Stablecoin Regulation implements a mandatory licensing system. While Singapore does not comprehensively ban the issuance and circulation of non-MAS regulated stablecoins, only restricting the use of the "regulated" label, Hong Kong explicitly stipulates that only licensed stablecoins can be promoted to the public. This difference reflects Hong Kong's more strict and comprehensive regulatory framework, with a focus on risk control, aiming to create a more secure market environment for consumers.
What Impacts Will the Regulation Bring?
(1) Potential Demonstration Effect on Mainland China: The Hong Kong bill may provide a referenceable compliance path for the mainland and promote the integration of blockchain and the real economy through technology export and standard alignment.
(2) Enhancing Hong Kong's International Financial Competitiveness: Competing with Singapore, Dubai, and other locations for the Web3 financial hub status, Hong Kong enhances investor confidence and attracts global capital through compliant legislation.
(3) Injecting New Liquidity into the Crypto Market: As a key channel in the digital asset world, stablecoins will greatly help promote RWA (Real World Assets) transactions, on-chain wage payments, cross-border settlements, and Web3 payment infrastructure development.
International Voices on the Hong Kong Dollar Stablecoin Regulation
1. Chengyi Ong, Chainalysis Asia-Pacific Policy Head, told CNBC: "Stablecoins are the pillars of the crypto ecosystem, and their stability opens doors to overcoming traditional financial frictions like slow cross-border payments and settlements. This potentially transformative utility has prompted governments worldwide, from Europe to Asia, to take measures and establish regulatory frameworks to foster high-quality stablecoins."
2. YuFeng Gong, HashKey OTC Risk and Strategy Director, mentioned: "Hong Kong's new stablecoin policy, with mandatory full reserve support, strict redemption guarantees, and HKMA oversight, sets a global benchmark." The policy "ensures traders receive institutional-grade reliability while positioning Hong Kong as a leader in compliant digital finance".
3. David Katz, Circle's Asia-Pacific VP of Strategy and Policy, stated: "Hong Kong has long been a global financial center with a deep and liquid foreign exchange market, supported by a favorable monetary exchange regulatory environment. With its dollar-pegged exchange rate and robust banking infrastructure, Hong Kong is an ideal location for dollar exchange."
4. Fiona Murray, Ripple's Asia-Pacific Managing Director, said: "Given Asia's status as a global trade center and massive remittance flows, stablecoins will increasingly be used for real-time international payment settlements, reducing friction and costs. Through stablecoins, users can quickly and efficiently trade and transfer tokenized assets—available 24/7, which is convenient for both traditional and crypto markets."
5. According to Mayer Brown partners Amita Haylock and Justin W. J. Lai, the bill's strict licensing, asset support, and consumer protection measures are expected to enhance investor and consumer confidence in stablecoins by providing clear regulatory standards, thereby encouraging more market participation and innovation in digital payment systems and decentralized finance.
6. Evan Auyang, Animoca Brands Group President, stated: Hong Kong has raised the regulatory threshold for stablecoins. With the stablecoin bill's passage, Hong Kong has established a licensing framework and clearly indicated its intent: to lead a new chapter in digital finance. By setting strict standards for reserves, redemption, and risk management, Hong Kong is providing truly clear regulation for stablecoin issuers while not stifling innovation.
7. Justin d'Anethan, a token advisor at Liquifi, stated that Hong Kong's latest stablecoin legislation provides a clear regulatory framework for issuers. The bill specifies guidelines on reserve management, redemption mechanisms, and licensing procedures, helping to enhance regulatory transparency. He noted that the new regulations show a friendly attitude towards traditional financial institutions looking to enter the market, making it somewhat attractive. However, he candidly admitted that Hong Kong currently does not play a key role in the global stablecoin landscape, with its market share and influence still needing improvement.
8. Moody's, one of the three major U.S. credit rating agencies, stated in a report that the introduction of this regulatory proposal helps eliminate the long-standing regulatory uncertainty in the stablecoin sector in Hong Kong, which has been a key obstacle affecting investor confidence and hindering widespread stablecoin adoption. These regulations will enhance the transparency and governance quality of stablecoin issuers, creating a "credit positive" effect on the entire digital asset industry and facilitating future stablecoin adoption.
9. The World Economic Forum recently wrote that in recent years, governments have been developing and implementing regulatory frameworks for the widespread use of stablecoins and cryptocurrencies. Experts pointed out that while scattered and contradictory regulations may hinder market development, clear and unified rules can help expand stablecoin usage.
10. In an article on Coin Insider, Fhumulani Lukoto mentioned that the bill's enactment is a strategic move to consolidate Hong Kong's position as a global digital asset center. Hong Kong aims to attract reputable stablecoin issuers and promote innovation in financial technology by providing clear regulation and strong oversight.
