EddieJayonCrypto
22 May 25
Hong Kong has passed legislation establishing a licensing regime for fiat-referenced stablecoins to promote its digital asset market and address investor protection and financial stability. The law requires issuers to obtain licenses from the Hong Kong Monetary Authority and comply with regulations ...
Hong Kong has passed legislation establishing a licensing regime for fiat-referenced stablecoins (FRS) to promote investor protection and financial stability while positioning itself as a digital asset hub. The new law requires issuers to obtain licenses from the Hong Kong Monetary Authority (HKMA) and comply with regulations covering reserve management, redemption at par value, client fund segregation, anti-money laundering (AML) controls, disclosure, and fitness and propriety standards.
This ordinance aims to balance crypto innovation with retail investor protection, especially in the wake of the 2023 JPEX exchange collapse. It bans unauthorized stablecoin advertisements following a six-month grace period and restricts issuance and marketing exclusively to licensed entities. By adhering to the “same activity, same risks, same regulation” principle, the law promotes a risk-based regulatory environment aligned with international standards.
Despite Hong Kong’s relatively small stablecoin market compared to global volumes—with Tether being the preferred cryptocurrency locally—the legislation provides clarity and a traditional finance-friendly framework for issuers. The move coincides with the U.S. Senate's advancement of its own stablecoin legislation, signaling a notable shift in crypto regulatory leadership toward the U.S.
Hong Kong’s ordinance is expected to take effect later this year, incorporating transitional provisions to assist issuers in meeting compliance requirements. This legislative milestone reflects Hong Kong's renewed embrace of digital assets while prioritizing robust investor safeguards and financial system stability.