Hong Kong passes Stablecoins Bill to regulate fiat-backed stablecoins

Hong Kong’s financial regulator will soon require stablecoin issuers to meet robust risk management and compliance standards under the new law.

Hong Kong just hit the gas on stablecoin regulation, passing a bill that makes licensing mandatory for anyone issuing fiat-referenced stablecoins. Under the new Stablecoins Bill, any business issuing stablecoins tied to the Hong Kong dollar or operating in Hong Kong must get a license from the Hong Kong Monetary Authority.

Licensed issuers will have to follow strict rules on managing reserves, allowing redemptions at face value, keeping client assets separate, and meeting standards for anti-money laundering, risk management, disclosure, and auditing.

Secretary for Financial Services and the Treasury Christopher Hui said the new law follows the idea of “same activity, same risks, same regulation” and focuses on managing risks to create strong rules. He added that the law matches international standards.

“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.”

HKMA CEO Eddie Yue

The new licensing regime will also limit stablecoin advertisements to licenced issuers in a bid to help prevent scams. The government plans to introduce further regulations on crypto trading platforms, over-the-counter services, and custodians in coming months.

The move comes amid growing interest in cryptocurrencies in Hong Kong. A November 2024 survey by the Hong Kong University of Science and Technology found that 25% of respondents plan to hold cryptocurrencies, up 6% since September 2023. The survey also showed rising confidence in regulated crypto exchanges despite ongoing uncertainty. The new Stablecoins Bill is expected to take effect later this year.