In a significant move to bolster financial integrity, Hong Kong’s financial regulator is set to enforce stringent risk management and compliance protocols for stablecoin issuers under a new legislative framework.
Hong Kong is accelerating its regulatory efforts on stablecoins by enacting a bill that mandates licensing for all businesses issuing fiat-referenced stablecoins. This pivotal legislation, known as the Stablecoins Bill, dictates that any entity issuing stablecoins linked to the Hong Kong dollar or operating within Hong Kong must secure a license from the Hong Kong Monetary Authority (HKMA).
Issuers who obtain this license will be required to adhere to comprehensive guidelines concerning the management of reserves. Essential stipulations include ensuring the ability to redeem stablecoins at face value, maintaining the segregation of client assets, and complying with rigorous standards related to anti-money laundering, risk management, transparency, and auditing.
Christopher Hui, the Secretary for Financial Services and the Treasury, emphasized that this new legislative framework embodies the principle of “same activity, same risks, same regulation.” He highlighted the focus on risk mitigation and the establishment of robust rules tailored to international benchmarks.
“We believe that a robust and fit-for-purpose regulatory environment would provide favourable conditions to support the healthy, responsible, and sustainable development of Hong Kong’s stablecoin and the broader digital asset ecosystem.”
— Eddie Yue, CEO of HKMA
The licensing system will also restrict advertisements for stablecoins to only those issuers who have received the proper licensing, aiming to reduce the incidence of scams. Furthermore, the government has plans to introduce additional regulations targeting cryptocurrency trading platforms, over-the-counter services, and custodial services in the foreseeable future.
This legislative advance comes at a time of increasing public interest in cryptocurrencies within Hong Kong. A survey conducted by the Hong Kong University of Science and Technology in November 2024 revealed that 25% of participants expressed intentions to invest in cryptocurrencies—a rise of 6% since September 2023. The research also indicated a growing sense of confidence in regulated cryptocurrency exchanges, despite persistent market volatility. The new Stablecoins Bill is anticipated to come into effect later this year.
