Hong Kong’s stablecoin ordinance will take effect on 1 August this year. Lawyers and a venture capital fund founder say Hong Kong’s latest stablecoin ordinance is “important” and “a step in the right direction” for the city’s development in the digital economy space.
The city’s Legislative Council passed the Stablecoins Bill on 21 May, establishing a licensing regime for fiat-referenced stable coins issuers.
Stablecoins are cryptocurrencies that purport to maintain a stable reference to a fiat currency, according to Geoffrey Chan, head of Skadden’s Asia investment management group.
“Stablecoins act as the major bridge that facilitates direct interconnection between the traditional financial system and the virtual asset world,” says Chan.
As of May 2025, the global market capitalisation of stablecoins stood at USD223 billion, representing 6.5% of the overall crypto-asset market. Max Rebol, CEO and managing partner of Harbour Industrial Capital, says stablecoin takes a big share in the overall crypto market.
He explained that currently licensed exchanges for virtual asset trading in Hong Kong such as HashKey Exchange only allow professional investors to trade stablecoins such as USDT and USTC. “After the passage of this bill, assets from unlicensed issuers could no longer be listed on a Hong Kong-regulated exchange,” he adds.
Any person or business issuing fiat-referenced stablecoins (FRS) in Hong Kong will need to obtain a licence from the Hong Kong Monetary Authority after the ordinance comes into effect this year, according to the HKMA.
“Only licensed issuers, virtual assets trading platforms, SFC-regulated firms, and authorised banks can offer stablecoins to the public,” Deacons’ fintech sector and intellectual property practice partner Ian Liu says. “The regulations aim to provide investor protection following the regulatory approach ‘same activity, same risks, same regulation’ principle.”
The ordinance covers currency-pegged stablecoins, but not other asset classes such as gold, says Ryan Chan, Skadden’s investment management group compliance counsel.
“The regime currently covers only global issuers who issue Hong Kong dollar-referenced stablecoins and Hong Kong local issuers who issue any fiat-referenced (be it referencing Hong Kong dollars, US dollars, euros or other currencies) stablecoins,” Ryan Chan added.
Aside from Hong Kong-based firms, companies incorporated outside of Hong Kong can obtain a licence, provided they incorporate a subsidiary in Hong Kong and have a physical presence and management teams in the city, says Deacons’ banking and finance practice senior associate Chris Wong.
Issuers must meet a list of requirements that involve their financial resources, reserve asset management and redemption guarantee. When it comes to financial resources, issuers must maintain a paid-up share capital of at least HKD25 million (USD3.2 million).
“However, in the consultation conclusion, the HKMA explained that it has flexibility and power to impose additional paid-up share capital requirements as licensing conditions where necessary,” says Ryan Chan from Skadden. “They expect the minimum paid-up share capital to be the lower of HKD25 million and 1% of the par value of the issuer’s stablecoins in circulation.”
Skadden’s Geoffrey Chan added that the ordinance also requires issuers to ensure that the value of reserve assets backing is at least equal to the par value of the stablecoins in circulation.
“The regime mandates reserve asset management and redemption guarantees to ensure issuers maintain sufficient liquidity and protect holders from losses,” says Liu from Deacons. “A clear framework would attract credible issuers, enhancing Hong Kong’s position as an international financial centre and fostering innovations and development in the digital economy space in Hong Kong.”
“Jurisdictions around the world are trying to regulate stablecoins, so Hong Kong is not an outlier here. It’s a natural evolution that’s happening everywhere,” Rebol from Harbour Industrial Capital says. “Passing the Stablecoins Bill is a step in the right direction.”
