HONG KONG SAR, CHINA Trends and Developments Contributed by: Sam Wu and Beverly Fu, YYC Legal LLP
The Stablecoins Ordinance The establishment of a comprehensive regulatory framework for stablecoins represents one of the most significant developments in Hong Kong’s fintech journey and marks a pivotal moment in Hong Kong’s approach to digital currencies. Following a rigorous legislative process that began with a public consul - tation in December 2023, the Stablecoins Bill was passed by the Legislative Council on 21 May 2025. The resulting Stablecoins Ordinance (Cap. 656 of the Laws of Hong Kong) officially took effect on 1 August 2025, establishing a mandatory licensing regime and a robust regulatory framework for the issuance and offering of specified stablecoins. The Stablecoins Ordinance is a direct response to the increasing prevalence of digital currencies and seeks to address regulatory gaps while ensuring consumer protection, financial stability, and the integrity of the financial system. The primary regulator under this new law is the HKMA, which is now responsible for licens - ing, supervising, and enforcing compliance among stablecoin issuers. Scope and licensing criteria The scope of the Stablecoins Ordinance is carefully defined. It regulates “specified stablecoins”, which are cryptographically secured digital representations of value that purport to maintain a stable value by refer - encing one or more official currencies (fiat currencies), or other units of account or stores of economic value specified by the HKMA. Importantly, existing regulated products, such as bank deposits, securities, futures contracts, and stored value facilities already covered under other regulatory regimes, are excluded from the definition of stablecoins. Under the Stablecoins Ordinance, any person who, in the course of business, issues a specified stable - coin in Hong Kong, or issues one outside Hong Kong that references the Hong Kong dollar, must obtain a licence from the HKMA. The Stablecoins Ordinance also strictly controls the offering and marketing of sta - blecoins. Only licensed stablecoin issuers, authorised institutions, licensed virtual asset trading platforms, and SFC-licensed corporations can offer specified stablecoins in Hong Kong or actively market (whether
in Hong Kong or elsewhere) such offering to the Hong Kong public. The licensing criteria are stringent and designed to ensure that only fit and proper entities can operate. For instance, a licensee is required to have a mini - mum paid-up share capital of HKD25 million and must maintain adequate financial resources at all times. It must maintain a pool of high-quality, highly liquid reserve assets for each type of specified stablecoin it issues, with a market value at least equal to the par value of all outstanding stablecoins. These reserve assets must be segregated from the licensee’s own assets. Complementing this is a clear redemption right that a licensee must honour redemption requests at par value without unduly burdensome conditions or The HKMA has supplemented the Stablecoins Ordi - nance with two crucial guidelines that provide further details on compliance expectations. • The Guideline on Supervision of Stablecoin Issuers elaborates on the minimum criteria for licensees, covering areas such as governance (requiring at least one-third of the board members to be independent non-executive directors), risk man - agement frameworks, and business conduct. It explicitly prohibits licensees from paying interest to stablecoin holders, reinforcing the characterisa - tion of stablecoins as a payment mechanism rather than an investment vehicle. unreasonable fees. HKMA guidelines • The Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Sta - blecoin Issuers) sets out a risk-based framework for combating financial crime, including require - ments for customer due diligence, transaction monitoring (including for unhosted wallets), travel rule compliance, and the use of blockchain analyt - ics tools to detect suspicious activity. As of now, the HKMA’s register of licensed issuers is open and will be updated in a timely manner, though no licences have been granted yet. Through its com - bination of rigorous prudential standards and robust consumer safeguards, the Stablecoins Ordinance establishes a secure and predictable environment for
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