Hong Kong passes the "stablecoin ordinance draft" - a brief overview of its process and main content.

Written by: AIMan@Golden Finance

As the saying goes, competition brings pressure. After the U.S. Senate accelerated the legislative process for the stablecoin GENIUS bill, Hong Kong's stablecoin regulatory bill has been passed ahead of the U.S.

On May 21, 2025, the Hong Kong Legislative Council officially passed the "Stablecoin Regulation Bill" in its third reading. The bill will come into effect as soon as it is signed by the Chief Executive of Hong Kong and published in the Gazette. This means that Hong Kong will officially implement stablecoin regulation. Anyone issuing fiat stablecoins in Hong Kong, or issuing fiat stablecoins claiming to be pegged to the value of the Hong Kong dollar in or outside Hong Kong, must apply for a license from the Hong Kong Monetary Authority.

This article briefly reviews the important history and main contents of the "Stablecoin Bill" in Hong Kong.

Important Milestones of the "Stablecoin Regulation Draft"

On January 12, 2022, the Hong Kong Monetary Authority released a discussion paper on crypto assets and stablecoins.

Hong Kong Virtual Asset Development Declaration, October 31, 2022

On January 31, 2023, the Hong Kong Monetary Authority released a summary of the discussion paper on crypto assets and stablecoins.

In June 2023, the licensing system for virtual asset trading platforms in Hong Kong was implemented.

From December 2023 to February 2024, a public consultation document will be released to collect opinions on legislative proposals regarding the regulation of stablecoin issuers, with a total of 108 opinions received.

On March 12, 2024, the Hong Kong Monetary Authority launched a stablecoin issuer sandbox.

On July 17, 2024, the Hong Kong Treasury and the Hong Kong Monetary Authority jointly published a summary of public consultation.

On July 18, 2024, the Hong Kong Monetary Authority announced the participants of the stablecoin sandbox: JD Coin Chain Technology ( Hong Kong ) Limited, Round Coin Innovation Technology Limited, Standard Chartered Bank ( Hong Kong ) Limited, and Animoca Brands, Hong Kong Telecommunications.

On December 3, 2024, the Chief Executive of Hong Kong instructed to submit the "Stablecoin Regulation Draft" to the Legislative Council.

On December 6, 2024, the "Stablecoin Regulation Draft" bill was published in the gazette.

December 18, 2024, first reading of the Legislative Council

On January 3, 2025, the Internal Affairs Committee will consider

On January 21, 2025, the bill committee will consider

May 21, 2025, passed the second/third reading

The date is to be determined, and it will officially take effect after the Chief Executive signs and the legislation is gazetted.

Main Content of the Draft Stablecoin Regulation

1. Regulatory Authorities

Financial Management Specialist

2. Regulated Stablecoins

Hong Kong's stablecoin licensing system focuses on fiat-backed stablecoins, defining "designated stablecoins" that must be regulated by the Financial Commissioner as stablecoins claiming to be pegged to one or more official currencies to maintain stable value.

Stablecoins that reference the value of other assets (such as commodities) may in the future be specified by the financial management officer as a certain digital form of value to indicate the specified stablecoin through announcements published in the official gazette.

3. Regulated Stablecoin Activities

No one may engage in regulated stablecoin activities, including the issuance of specified stablecoins, in Hong Kong without obtaining the license granted by the Financial Management Commissioner.

Any person actively promoting the issuance of a specified stablecoin to the public in Hong Kong is considered to be engaging in regulated stablecoin activities and must obtain a license from the Financial Commissioner.

Stablecoins that are pegged to the value of the Hong Kong dollar, whether in whole or in part, shall be covered as regulated stablecoin activities even if issued outside of Hong Kong, regardless of the location of issuance.

4. Dealing Rules

The guidelines for issuing stablecoins in Hong Kong include the following key elements:

(a) Management and Stabilization Mechanism of Reserve Assets: This indicates that the market value of the reserve assets of the stablecoin must always be at least equal to its circulating face value. License holders must have a robust stabilization mechanism, proper segregation and management arrangements for the reserve assets, and sufficient disclosure policies;

(b) Redemption: To ensure that the holders of the specified stablecoin (the holders) are appropriately protected, the licensee must pay the face value of the specified stablecoin to the holder who has made a valid redemption request, without imposing overly cumbersome conditions or unreasonable fees. The redemption procedures, timelines, any conditions or fees involved, and rights should also be clearly disclosed for the reference of the holders;

(c) Having a physical company in Hong Kong: In order to ensure that the Financial Commissioner can carry out effective regulation and enforcement, licensees must have a physical company in Hong Kong;

(d) Financial Resources: Licensees must possess sufficient financial resources to operate their business, including a minimum paid-up capital requirement of HKD 25 million;

(e) Suitable Persons: The controlling person, CEO, and directors of the licensee must be suitable persons, and those responsible for managing and operating the regulated stablecoin activities must possess the necessary knowledge and experience;

(f) Prudence and Risk Management: Licensees must establish appropriate risk management policies and procedures to manage the risks arising from their business operations. Such policies and procedures must be commensurate with their scale of operation and complexity. Licensees should also have sound and adequate control systems in place to prevent and combat potential money laundering and terrorist financing activities.

5. License duration

Grant the licensee an open license, as long as the license has not been revoked by the Financial Supervisory Commissioner, the license will remain valid. The licensee will be subject to ongoing supervision by the Financial Supervisory Commissioner.

6. Who can sell stablecoins to the public?

Only the institutions regulated by the Financial Commissioner or the Hong Kong Securities and Futures Commission may sell specified stablecoins to the public:

(a) Licensed entities under the fiat currency stablecoin issuer system;

(b) Virtual asset trading platforms licensed by the Securities and Futures Commission;

(c) A corporation licensed by the Securities and Futures Commission to conduct Type 1 regulated activities under Section 116 of the Securities and Futures Ordinance (Cap. 571);

(d) Recognized institutions as defined in the Banking Ordinance (Chapter 155).

7. What are the penalties for issuing stablecoins without a license or for licensed issuers who violate regulations?

(a) Conducting stablecoin activities without a license: a fine of HKD 5 million and imprisonment for seven years;

(b) Sale of stablecoins by unlicensed entities: A fine of HKD 5 million and imprisonment for seven years;

(c) Involving fraudulent or deceptive acts related to the trading of specified stablecoins: penalty of a fine of HKD 10 million and imprisonment for ten years;

(d) Inducing others to obtain specified stablecoins by making fraudulent or misleading statements: punishable by a fine of HKD 1,000,000 and imprisonment for seven years.

What powers does a financial management officer have?

In order to effectively implement the system, the Legislative Council of Hong Kong has empowered the Monetary Authority to conduct ongoing supervision, including the power to require the submission of documents and records, issue directions, make regulations, issue guidelines, etc., such as: specifying an activity as a regulated stablecoin activity; The entity designated to provide services to a stablecoin payment system is a regulated designated stablecoin entity; designate a stablecoin issuer that is not required to apply for a licence as a designated stablecoin entity; instruct the investigator to conduct an investigation, request evidence relating to the alleged contravention, request the relevant person to assist in the investigation and, where necessary, apply to the Magistrate for a search warrant and conduct seizures; and regulatory penalties, including suspension or revocation of licences, and the imposition of a fine not exceeding HK$10 million or three times the amount of profits gained or losses avoided as a result of the breach, whichever is higher.