Hong Kong completes stablecoin legislation, RMB stablecoin is in sight, tech giants are ready.

As the stablecoin bill advances in the U.S. Senate, Hong Kong has officially completed its legislation on stablecoins.

On May 21, Hong Kong’s Legislative Council passed the Stablecoin Bill, which establishes a licensing regime for issuers of Hong Kong’s fiat currency stablecoins and improves the regulatory framework for virtual asset activities, aiming to safeguard financial stability and promote financial innovation. The Hong Kong SAR Government expects the ordinance to come into effect within this year.

Regulators have currently conducted regulatory testing on the operational plans of three issuers in the sandbox. Chairman of the draft regulations committee, Member Qiu Dagen, expressed support for the development of stablecoins pegged to the Hong Kong dollar and the renminbi, enhancing Hong Kong’s role as a digital bridge connecting the Mainland and other countries, while also urging the government to maintain flexibility in the licensing process and accelerate the approval process.

! Hong Kong stablecoin legislation passed, JD.com and other technology companies are poised to go, and RMB stablecoins are expected to be included in the system

Stablecoin activities require licensing, and reserve requirements are strict

The “Stablecoin Regulation Draft” clearly stipulates that the following three types of activities require a license:

1. Issue fiat stablecoin in Hong Kong
2. Issue Hong Kong dollar stablecoin in Hong Kong or outside Hong Kong
3. Actively promote the issuance of its fiat stablecoin to the public in Hong Kong.

According to the Sandbox participant “Yuanbi Technology”, the draft puts forward four key requirements for issuers: first, in terms of reserves, licensees must maintain a sound stablecoin mechanism and ensure that reserve assets are composed of high-quality and highly liquid assets ( such as cash, bank deposits, government bonds, repurchase agreements, reverse repurchase agreements, and money market funds that invest in the above assets ) and at all times equal to the denomination of the circulating stablecoin, and properly segregated.

Second, stablecoin holders have the right to redeem stablecoins at face value without fees, and redemption requests must be processed within a reasonable time. Third, it meets regulatory requirements such as anti-money laundering, risk management, information disclosure and auditing. Fourth, it must be traded on a licensed virtual asset trading platform.

In terms of issuer qualifications, it is stipulated that license holders must have sufficient financial resources and liquid assets, with a minimum capital requirement of 25 million HKD. The license has no fixed term and remains valid unless revoked or the license holder is liquidated or deregistered from the Hong Kong company registry.

In order to protect the rights and interests of the public and investors, the Draft stipulates that only designated licensed institutions are allowed to sell fiat currency stablecoins in Hong Kong, and only fiat currency stablecoins issued by licensed issuers can be sold to retail investors. These designated licensees include stablecoin issuers licensed by the Monetary Authority, banks, Type 1 licensed entities by the Securities and Futures Commission of Hong Kong, and virtual asset trading platforms licensed in Hong Kong.

The draft regulations also establish a strict penalty mechanism: conducting regulated stablecoin activities without a license can result in a fine of 5 million HKD and imprisonment for seven years; selling stablecoins by unlicensed institutions can also result in a fine of 5 million HKD and imprisonment for seven years.

Three institutions have entered the sandbox, and tech giants are ready to go.

As early as October 2022, the Hong Kong SAR Government issued the Policy Statement on the Development of Virtual Assets in Hong Kong, confirming its determination to improve the regulatory framework for virtual assets. Subsequently, the Anti-Money Laundering and Counter-Terrorist Financing Ordinance was amended in December 2022 to introduce a licensing regime for virtual asset service providers to ensure that trading platforms comply with international anti-money laundering standards and protect investors. Following the effective licensing regime for virtual asset trading platforms in June 2023, Hong Kong has continued its efforts to improve the regulatory framework for virtual assets, including the introduction of a licensing regime for fiat stablecoin issuers.

In December 2023, Hong Kong announced plans to draft new legislation to implement a licensing system for fiat stablecoin issuers. Subsequently, on July 18, 2024, three institutions were approved to participate in the regulatory sandbox testing, and the draft text was published in December of the same year, eventually passing in the Legislative Council on May 21, 2025.

At present, the Hong Kong Monetary Authority (HKMA) has launched the Sandbox Programme for Stablecoin Issuers to understand the business models of institutions interested in issuing fiat stablecoins in Hong Kong, and to communicate regulatory expectations and provide guidance. The first batch of three institutions will be approved to enter the sandbox on July 18, 2024, including a consortium of Standard Chartered Hong Kong, Anxi Group (Animoca Brands), Hong Kong Telecom, JD Chain Technology ( Hong Kong ), and Yuanbi Innovation Technology. Regulators have conducted initial oversight and testing of the operational plans of these sandbox participants.

It is worth noting that a technology group recently released a number of job postings related to RWA( real world asset ), clearly requiring that the product design should be seamlessly integrated with its stablecoin and digital yuan. At the same time, the group is also recruiting for the position of “overseas financial business development”, focusing on promoting the implementation of stablecoin business, which means that with the passage of the bill, its stablecoin project may be launched soon.

After the “Stablecoin Regulation Draft” officially comes into effect, there will be a 6-month transition period for stablecoin issuers engaged in the above three licensed activities in Hong Kong, allowing existing issuers to apply for a license within the first 3 months after the licensing system comes into effect.

Hong Kong’s Position in Global Stablecoin Competition: RMB Stablecoin Expected to Be Included in the System

At the same time as the third reading of the Stablecoin Bill was passed by the Hong Kong Legislative Council, the legislative process of the GENIUS Act Stablecoin Bill in the United States was also advancing. On May 22, the U.S. Senate voted 69 to 31 to pass a motion to debate the bill, marking the official entry of the stablecoin regulation bill into the discussion stage of amendments. The previous motion to terminate the debate was voted 66 votes, and the bill is expected to become the first federal stablecoin regulatory framework in the United States.

The draft stablecoin regulations in Hong Kong also referenced existing stablecoin regulatory frameworks and ongoing regulatory proposals during its formulation.

During the discussion in the Legislative Council, the Hon Duncan Yau, Chairman of the Bills Committee, said that he was pleased with the Government’s clarification that in addition to the Hong Kong dollar and the US dollar, the renminbi would also be considered as one of the fiat stablecoins in the future.

“I strongly support the inclusion of the renminbi in the local stablecoin system, as it will enable Hong Kong to become a digital bridge between the mainland and other countries, and can also attract more blockchain projects and institutional investors to settle in Hong Kong through the renminbi-based stablecoin, forming a digital financial ecosystem driven by both the Hong Kong dollar and the renminbi, further strengthening Hong Kong’s status as a financial center, and accelerating the internationalization of the renminbi.” He pointed out that in the future, especially under the trend of global de-dollarization, RMB stablecoins will become the choice ( of many countries ) including friendly countries such as the Belt and Road Initiative and the Middle East to diversify trade, investment and reserves, which will help enhance the status of RMB as an international trade and hedging tool.

On licensing policy, the Hon Duncan Chiu called on the Government to remain open and flexible and allow more organisations with the capacity and resources to compete. “I hope that the Government will remain flexible in issuing licences in the future, so that more issuers can compete in the Hong Kong market, which is a natural process,” he said. Just as there are now two major stablecoins in the world that account for most of the trading volume, but the current pattern of US dollar stablecoins has been formed after market elimination, we hope that in the future, more institutions in Hong Kong will participate in the development of different proportions of Hong Kong dollar and RMB stablecoins. "

He believes that as long as the issuer is financially robust and has sufficient regulatory capabilities, through healthy competition, Hong Kong will have the opportunity to develop an internationally accepted stablecoin market, potentially with currencies other than the US dollar, which will have a significant impact on Hong Kong’s financial development.

The Hon Duncan Chiu appealed to the HKMA to commence licensing work as soon as possible after the passage of the Bill, so as to attract more interested and qualified potential operators to expedite the launch and testing of stablecoins based on different currencies and different collaterals in Hong Kong. “Of course, the application scenarios are important, but I hope that the government will remain flexible in terms of approval requirements and so on, so that different solutions can be tested in Hong Kong.”

With the implementation of regulatory systems for virtual asset trading platforms and stablecoin issuers, the Hong Kong Monetary Authority has stated that the government will continue to support the development of the virtual asset industry. The government will next conduct consultations on over-the-counter trading and custody services for virtual assets, and plans to publish a second policy declaration on the development of virtual assets.