Regulatory Framework and Potential Impact of the Stablecoin Ordinance in Hong Kong

On May 29, 2025, Hong Kong officially promulgated the Stablecoin Ordinance, which will come into effect on August 1. The bill has sparked a lot of attention both inside and outside the industry, with people generally wanting to know what practical benefits it can bring to the Web3 industry, and how to apply for relevant licenses.

This article will provide a detailed overview of the new "Regulations" and explore the following core issues:

• What are the minimum requirements for applying for a stablecoin license?
• What businesses can be conducted with a license?
• What are the provisions for reserve asset management and redemption mechanisms?
• What impact do stablecoins have on cross-border payments with the Renminbi?
• What does this regulation mean for the industry? How will the landscape of the Hong Kong financial market change?

1. Interpretation of the Regulatory Framework for the Hong Kong "Stablecoin Ordinance"

Which stablecoin is regulated in Hong Kong?

The "Regulations" limit the regulatory objects to "designated stablecoins" operating in Hong Kong, which are stablecoins that maintain stable value by fully referencing one or more official currencies, calculations specified by the Monetary Authority, or forms of economic value storage. In practice, this is what we commonly refer to as fiat-backed stablecoins.

The Hong Kong government has chosen to focus on the payment function because fiat stablecoins are most likely to be used as "quasi-currency" in the financial trading market. The Ordinance expressly restricts licensees from paying interest on specified stablecoins issued by them, so as to reduce the likelihood that they will be regarded as savings financial products.

2. Which stablecoin activities are restricted?

The regulations stipulate that the following activities require a license:

• Issuance of specified stablecoins in Hong Kong
• Issuance of specified stablecoins pegged to the Hong Kong dollar outside Hong Kong
• Other activities designated by the financial management officer
• Actively promote the above activities to the public

In addition, the Regulations also restrict offers, advertisements, fraud, and other activities related to designated stablecoins.

3. How to apply for a stablecoin license?

The applicant must submit a formal application to the financial management officer, meeting the following minimum standards:

• Have sufficient financial resources and liquid assets ( of no less than 25 million HKD )
• Configure the corresponding reserve assets
• Establish a redemption mechanism
• The management and controlling persons are appropriate candidates.
• Establish a prudent and risk management system
• Implement anti-money laundering measures
• Have dedicated resources to run your business
• Disclosure of relevant information
• Develop a recovery plan

4. What are the compliance obligations of licensees?

Main obligations include:

• Pay annual fee
• Public Display License Number
• Continuously meet the minimum standards
• Report changes to information promptly

The Monetary Authority may impose or modify licensing conditions on a temporary basis in response to changes in market risk.

5. Mechanism for License Cancellation, Revocation and Suspension

The Monetary Authority may suspend or revoke a licence under certain circumstances.

6. How do the regulations protect stablecoin users?

Mainly through the following two aspects:

• Strictly regulate the publicity and marketing practices of licensees
• Establish a mechanism to protect the rights and interests of users, including reserve asset management, audit and redemption

How broad are the regulatory powers of the Monetary Authority?

The Monetary Authority not only has the authority to approve and issue licenses, but also has the power to supervise on a day-to-day basis and to conduct direct investigation and evidence collection when the licensee has major business risks.

II. Significance of the Stablecoin Ordinance

1. Significance at the policy level

Hong Kong's establishment of a stablecoin regulatory system through local laws is essentially a preemption of "digital coinage".

2. Implications for the Web3 world

The institutionalization of stablecoins helps to promote an end-to-end closed loop for RWAs and may become the "native funding layer" for RWAs. International trade remains the largest potential market for stablecoins.

For native Web3 projects, the biggest impact is gaining access to channels for larger-scale assets, with the opportunity to participate in higher quality and more explosive liquidity releases.

3. The possibility of RMB stablecoin

Although the Renminbi stablecoin is still a sensitive topic at present, its long-term potential cannot be ignored. Hong Kong may become a "policy buffer zone" between the Renminbi stablecoin and the international Web3 market.

Conclusion

With the formal implementation of the "Regulations", Hong Kong has taken a significant step in the global stablecoin regulatory race. This is not only an innovation in local financial policy but also a strategic exploration of the entire Web3 ecosystem, RWA, and even the global monetary landscape. Hong Kong has provided a clear roadmap: to legalize, systematize, and industrialize stablecoins. This presents both a challenge and an opportunity for the entire Web3 world.