HONG KONG SAR, CHINA Trends and Developments Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
Introduction Hong Kong has emerged as a leading jurisdiction in developing and adopting blockchain technology. The city’s deep-rooted financial services ecosystem, com- bined with its strategic access to mainland China and the broader Association of Southeast Asian Nations (ASEAN) region, has cemented its status as a glob- al hub for blockchain innovation and digital assets. Through initiatives ranging from blockchain-integrated public services to the introduction of tokenised instru- ments and stablecoin regulatory frameworks, Hong Kong is actively constructing the legal and technical infrastructure necessary to sustain the sector’s long- term growth and evolution. During the past year, Hong Kong’s digital asset market has transitioned from rule-making to rule implementa- tion. The most significant development is the formal regulation of stablecoins as a live, licensed activity (effective 1 August 2025), with the first issuer licences granted in April 2026. In parallel, the Securities and Futures Commission (SFC) has expanded the permissible scope of activity for licensed virtual asset trading platforms (VATPs) and intermediaries. Under defined conditions, this now includes regulated staking, shared liquidity arrange- ments, affiliated market making, broker-provided margin-style financing and a framework for perpetual contracts targeted at professional investors. A third defining trend is the shift of tokenisation from pilot initiatives to real economic use cases. The gov- ernment’s third digital green bond issuance in Novem- ber 2025 incorporated settlement options using tokenised central bank money (including e-CNY and e-HKD). Meanwhile, the Hong Kong Monetary Author- ity (HKMA) launched Ensemble (ie, the pilot phase of Project Ensemble) to support real-value tokenised transactions through 2026. A Market Entering Its Implementation Era Hong Kong’s trajectory during the past year can be understood as both a tightening and widening of the regulatory perimeter. Tightening refers to the introduc- tion of clearer requirements, licensing thresholds and marketing constraints for activities now seen as capa- ble of affecting the broader financial system. Widening
reflects regulators’ efforts to extend oversight beyond exchanges – particularly into stablecoins, brokerage/ dealing activities and custody – while enabling a broader suite of regulated products. This reduces the incentive for market activity to migrate to offshore or unregulated venues. For market participants, the key implication is that Hong Kong is no longer a “single-regime” jurisdic- tion centred on exchange licensing. Instead, business models are assessed holistically across the full value chain: issuance, trading, brokerage, custody, product structuring, distribution and tokenised representations of traditional assets. Stablecoins: From Legislative Milestone to Live Licensing Hong Kong’s stablecoin regime took shape through a clear sequence of legislative and regulatory mile- stones in 2025. The Stablecoins Bill was passed on 21 May 2025, the Ordinance was gazetted on 30 May 2025 and a Commencement Notice set 1 August 2025 as the date the regime came into force. In the lead- up to commencement, the HKMA published the core implementation framework, including finalised super- visory and AML/CFT guidelines for licensed stablecoin issuers, as well as explanatory notes on licensing and transitional arrangements. A central design feature of the regime is “retail gat- ing”. Only fiat-referenced stablecoins (FRS) issued by licensed issuers may be offered to retail investors, and distribution is restricted to specified institutions. This establishes a tightly controlled pathway for retail participation from the outset. A particularly business-critical feature is the breadth of the licensing trigger. As clarified by the HKMA in May 2025, a licence is required not only for issuance “in Hong Kong”, but also for any FRS that references the Hong Kong dollar, regardless of whether issuance occurs inside or outside of Hong Kong. For interna- tional issuers, this creates a classic “targeting” and “currency reference” risk. An offshore issuer may fall within Hong Kong’s regulatory perimeter even without a locally incorporated issuing entity. As a result, struc- turing decisions – such as issuer domicile, reference currency, marketing strategy, distribution partnerships
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