The Legislative Council of Hong Kong passed a legal framework regulating stablecoins, establishing a licensing regime for issuers of stable assets.
Under Hong Kong’s new stablecoin law, all issuers of digital assets backed by fiat currency must obtain mandatory licensing from the Hong Kong Monetary Authority (HKMA).
Any organization issuing stablecoins in Hong Kong or assets backed by the Hong Kong dollar outside the region will be required to receive approval from the financial regulator. The law also sets out requirements for reserve management, redemption procedures, and risk management aimed at protecting investors’ interests.
Christopher Hui, Secretary for the Financial Services and the Treasury Bureau (FSTB) of Hong Kong, emphasized that the regulation follows the principle of “same activity, same risks, same regulation,” with a focus on a risk-based approach to create a sustainable regulatory environment for digital assets.
The law will come into effect by the end of 2025, after which the licensing process will begin. Until then, interested companies can participate in a regulatory sandbox for stablecoin issuers launched by the HKMA last year. According to Eddie Yue, Chief Executive of the HKMA, this initiative allows testing of new models and technologies under controlled conditions before their broader adoption.
The process of preparing this new licensing regime was initiated by the FSTB and HKMA in March of this year.
