On 1 August 2025, Hong Kong’s Stablecoins Ordinance (Cap. 656) comes into force—marking a significant step in the city’s journey to becoming a leading hub for regulated digital assets. If your business touches stablecoins, especially those tied to the Hong Kong Dollar (HKD), this is your moment to pay attention.

In short, the ordinance creates a licensing and regulatory framework for issuers and operators of stablecoins in Hong Kong. It’s enforced by the Hong Kong Monetary Authority (HKMA) and focuses on ensuring transparency, trust, and financial stability.

What counts as a “specified stablecoin”?

A “specified stablecoin” is defined as a cryptographically secured digital representation of value that:

• Purports to maintain a stable value with reference to one or more official currencies (e.g., HKD, USD),

• Is used as a medium of exchange, unit of account, or store of value,

• Operates on a distributed ledger.

Excluded from this definition are central bank digital currencies (CBDCs), securities, stored value facilities (SVFs), and other instruments already regulated under existing financial regimes.

Who must get a license?

The new rules apply to individuals or entities that:

• Issue a specified stablecoin in Hong Kong,

• Issue a stablecoin anywhere in the world that references the Hong Kong Dollar,

• Carry out an activity designated by the HKMA that relates to stablecoins,

• Actively market a specified stablecoin to the public in Hong Kong.

This means the law has extraterritorial reach. Even if a company is based outside Hong Kong, it may still need to comply if it issues or promotes stablecoins linked to HKD.

What are the licensing requirements?

To obtain a license, stablecoin issuers must meet several conditions:

Reserve assets:

• Issuers must maintain high-quality, segregated, and transparent reserve assets.

• Full disclosure of the composition, custody, liquidity, and management of the reserves is required.

• Algorithmic stablecoins are not permitted.

Redemption:

• Issuers must allow for timely redemption of the stablecoin at par value in the referenced currency.

• Redemption must not be subject to unreasonable fees or barriers.

Localization:

• The issuer must be a Hong Kong-incorporated company.

• Senior management must be based in Hong Kong.

Financial resources:

• Issuers must demonstrate adequate financial resources and liquidity.

• The minimum paid-up share capital is HKD 25 million.

Governance:

• Directors and key personnel must pass a “fit and proper” test, including background checks, experience, and integrity standards.

Disclosure and compliance:

• Issuers must publish a detailed whitepaper.

• Regular audits and compliance with anti-money laundering (AML) and counter-financing of terrorism (CFT) requirements are mandatory.

• Ongoing reporting and oversight obligations apply.
  
  

What happens if you don’t comply?

Operating without a license or breaching the ordinance carries significant penalties:

• Up to HKD 5 million in fines,

• Up to seven years of imprisonment,

• Daily fines for ongoing violations,

• Suspension or revocation of license by the HKMA.

The HKMA is empowered to investigate, request records, appoint managers, and issue binding directives.

Why does this matter?

The Stablecoins Ordinance is not just a compliance mechanism—it signals Hong Kong’s commitment to becoming a regulated digital finance hub. By focusing on fiat-referenced stablecoins and excluding high-risk categories like algorithmic coins, the ordinance reflects a cautious but forward-looking approach.

In the broader context of global regulation—such as the EU’s MiCA and various US proposals—Hong Kong is aiming to position itself as a leader in regulated Web3 infrastructure, particularly for Asia.

Final thoughts

If you’re involved in the stablecoin space—whether as an issuer, investor, legal advisor, or platform operator—this law is a game changer. It brings clarity but also raises the bar.

The message is clear: Hong Kong is open for crypto innovation, but only if you play by the rules.

Need help navigating this regulatory framework or evaluating your exposure? Get in touch.