Hong Kong Passes Landmark Stablecoin Legislation

By: Eva Baxter

In a significant move that underscores its ambition to become a global hub for digital finance, Hong Kong has introduced a comprehensive regulatory framework for fiat-backed stablecoins. As confirmed by lawmaker Johnny Ng, the Hong Kong Legislative Council passed the new stablecoin bill, which is set to officially come into force by the end of 2025. This legislation marks a pivotal step in Hong Kong's efforts to elevate its status in the global digital asset ecosystem.

Key components of the new regulatory framework include a stringent licensing regime managed by the Hong Kong Monetary Authority (HKMA). This regime provides a transitional phase for entities to align with the new requirements, which dictate that only licensed issuers can release stablecoins pegged to the Hong Kong dollar. The legislation intends to bolster trust through rigorous compliance standards, transparency, and robust operational protocols.

The framework obliges all issuers of fiat-referenced stablecoins (FRS) to adhere to strict operational mandates. These include maintaining asset segregation, ensuring redemption at par value, and upholding mechanisms to guarantee price stability. Enforced compliance with anti-money laundering regulations, risk management practices, disclosure requirements, and independent audits is also required. Furthermore, only certified firms are permitted to market these stablecoins to the public.

Christopher Hui, Secretary for Financial Services and the Treasury, highlighted that this legislation adopts a risk-based regulatory model consistent with international standards. This approach aims to foster a secure environment for digital currency users, stimulate long-term industry growth, and reinforce Hong Kong’s reputation as a leading financial center. By creating a clearer path for major institutions to gain licensure by the end of the year, Hong Kong positions itself firmly on the global stage of Web3 development and digital asset management.