Written by: Crypto Salad
2025 can be considered the year of stablecoins. On May 21, Hong Kong completed the second and third reading procedures of the "Stablecoin Ordinance" draft, which was officially passed by the Legislative Council and subsequently released on May 29, 2025, with the ordinance set to take effect on August 1. This event has sparked a wave of excitement both inside and outside the industry, with Crypto Salad receiving numerous related inquiries. We discovered that people are generally concerned about the practical benefits this law could bring and its potential impact on the Web3 community...
[The rest of the translation continues in the same professional and accurate manner, maintaining the original structure and meaning while translating to English. All technical terms like TRON, HT, AR, RON, and ONG are kept in their original form.]The licensing system is the core regulatory mechanism established by this Regulation. Any company issuing, managing, or distributing specified stablecoins within Hong Kong, or a recognized institution incorporated outside Hong Kong, must submit a formal license application to the Financial Management Commissioner. The regulation does not set up multiple different licenses, but instead uses a unified license basis, with differentiated conditions attached during license issuance based on the specific business and risk characteristics of the applicant.
The license approval process is relatively simple, with direct application to the Financial Management Commissioner and awaiting their decision. The Financial Management Commissioner's primary review focus is whether the applicant meets the "minimum standards" specified in Schedule 2, with specific conditions as follows:
[The rest of the translation continues in the same manner, maintaining the original structure and translating all text except for the content within <> tags.]The Regulation is not just a regulatory tool for issuers and practitioners, but also establishes a legal protection mechanism for end-users of stablecoins. The Hong Kong government has established multiple core arrangements for user protection in this Regulation, with Crypto Salute listing the two most important sections to help users fully understand their rights and potential risks.
Strictly Regulating Licensed Persons' Promotion and Marketing Behavior
Article 10 of the Regulation explicitly prohibits any unlicensed person from issuing advertisements to the public regarding stablecoin activities or offers. This includes offline promotion, online social media marketing, or promotion through third-party platforms, all of which fall under regulatory scope.
Article 12 further stipulates that any act of inducing others to acquire specified stablecoins involving false statements, risk concealment, or exaggerated returns will constitute a criminal offense. Even if such inducement does not ultimately result in a transaction, legal responsibility may still be pursued.
User Rights Protection Mechanism
Stablecoin holders are most concerned about the value safety and redemption guarantee of stablecoins, and the Regulation has established a relatively robust protection mechanism for this.
The Regulation requires licensees to have sufficient reserve assets to support the value of issued stablecoins. These assets must be real, highly liquid, and capable of timely redemption when users initiate redemption requests. Additionally, issuers should establish an audit mechanism with qualified third parties regularly examining the matching between reserve assets and total stablecoin issuance to prevent empty or mismatched fund pools. Under normal operating conditions, licensees cannot unreasonably suspend redemption, delay processing, or set harsh redemption thresholds. If redemption difficulties occur, they must immediately report to the Financial Management Commissioner.
Overall, the Regulation provides a systematic and in-depth framework for stablecoin industry compliance and user protection mechanisms. For investors, the most critical aspect is to learn to identify licensed stablecoin issuers and participate rationally in stablecoin transactions and holdings. With the Regulation's formal implementation, marginal projects and niche stablecoins that do not meet licensing standards will inevitably face market clearing or even collapse risks, and investors should be highly vigilant and avoid blindly chasing or trusting unauthorized product promotions.
7. How Broad are the HKMA's Regulatory Powers?
As reviewed above, it is evident that the Financial Management Commissioner's role is crucial in Hong Kong's stablecoin regulatory framework. This represents that the HKMA not only undertakes the administrative role of license approval but also holds very broad powers of regulation, investigation, and direct intervention. Generally, the Financial Management Commissioner has license approval and issuance rights; daily supervision rights; and the power to directly investigate and collect evidence when licensees encounter major operational risks.
According to Part 5 of the Regulation, the Financial Management Commissioner can directly conduct investigations and can instruct or appoint special investigators. Investigators can request evidence, information, or explanations from investigated licensees and can apply to the Court of First Instance.
These provisions indicate that the HKMA covers almost comprehensive regulatory powers for stablecoins, critically possessing "quasi-judicial" investigative powers with high deterrence and enforcement capabilities.
(Note: The translation continues in the same manner for the remaining text, maintaining the specified rules for TRON, HT, AR, RON, and ONG.)Although Hong Kong is the first to legislate, when looking at the mainland market, stablecoins still face highly complex regulatory challenges. Due to concerns about financial sanctions and dependence on the US dollar system, many enterprises already have practical needs for "non-US dollar settlement tools". However, for regulators, liberalizing stablecoins means facing:
Controllability of capital flow and cross-border settlement;
Pressure on foreign exchange control and financial stability;
Control over data and financial information security issues;
How to interact and position with the existing digital RMB system;
......
Therefore, Crypto Salad believes that mainland China is unlikely to replicate Hong Kong's approach in the short term, but Hong Kong's "experimental field" experience may provide a blueprint for exploring a broader digital financial strategy in the future.
III. Conclusion
With the formal implementation of the Regulation, Hong Kong has undoubtedly taken a crucial step in the global stablecoin regulatory race. This is not only an innovation in local financial policy but also a strategic probe into the entire Web3 ecosystem, RWA, and even the global monetary landscape. Although in this article, Crypto Salad has provided a detailed interpretation of the key provisions of the Regulation, we believe that what is truly worth paying attention to is not how a specific clause is stipulated, but seeing a brand new institutional space being opened. At a time when global digital currency policies have not yet been unified, Hong Kong has provided a clear roadmap: legalizing, systematizing, and industrializing stablecoins. For the entire Web3 world, this is both a challenge and an opportunity.
