Hong Kong launches new stablecoin regime

Hong Kong has taken a decisive leap into the way forward for digital finance with the enactment of the Stablecoins Ordinance (SO), making it one of many first jurisdictions globally to implement a complete regulatory framework for sure stablecoin issuers. Sure stablecoin issuers in Hong Kong have till 31 October 2025 to use for a licence software underneath the brand new regime.

The brand new stablecoin regime

The SO (Cap. 656) establishes a brand new framework that allows the HKMA to licence and oversee actions involving designated stablecoins, granting the regulator a collection of investigatory and enforcement powers.

Scope of regulation

The laws creates a licensing regime for issuers of specified stablecoins i.e. fiat-referenced stablecoins. The SO attracts on provisions from different monetary providers legal guidelines just like the Fee Companies and Saved Worth Amenities Ordinance (PSSVFO), Securities and Futures Ordinance (SFO) and the Banking Ordinance (BO).

Stablecoins tied to different property, like treasured metals, presently fall outdoors the brand new regime however the HKMA is given powers to convey them into scope in future. Fiat-referenced stablecoins based mostly on algorithms, slightly than reserve property, are additionally excluded.

Licensing necessities

Individuals conducting ‘regulated stablecoin exercise’ should get hold of a licence from the HKMA.

All specified stablecoin issuers will probably be held to the identical regulatory requirements, with some exceptions for Authorised Establishments (that are HKMA authorised banks). Guidelines embody AML/CFT, governance, audit, disclosure, and threat administration. The regime additionally requires issuers to make sure that holders can redeem stablecoins at par worth in a well timed method.

If an issuer shouldn’t be licensed to situation stablecoins by the HKMA, then their stablecoin can solely be supplied by ‘Permitted Offerors’ to skilled buyers. Permitted Offerors embody Authorised Establishments, SFC licensed companies and SFC licensed digital asset buying and selling platforms. Stablecoins not categorised as specified stablecoins should not lined by Hong Kong’s stablecoin regime, although different legal guidelines might apply relying on the stablecoins’ construction and options.

What’s occurring subsequent?

licence candidates are inspired to contact the HKMA for a dialogue on their background and enterprise mannequin, and the HKMA’s regulatory expectations.

The place the father or mother firm of the potential applicant conducts a digital asset associated enterprise or different monetary providers abroad, the HKMA might seek the advice of the house regulator on its views on the enlargement of the group’s actions into issuing specified stablecoins in Hong Kong.

There will probably be a three-month interval, ending on 31 October 2025, for pre-existing specified stablecoin issuers to submit a licence software which can permit them to proceed their operations in Hong Kong. If they don’t submit a licence in that interval, then they have to shut their enterprise in Hong Kong on or earlier than 30 November 2025.