Hong Kong Launches Licensing Law for Stablecoin Issuers

• Only licensed companies can offer stablecoins to everyday users in Hong Kong by law.
• The new rules demand clear asset backing and safe handling of client money at all times.
• The law also blocks fake ads and plans more rules for trading and storing digital assets.

Hong Kong has officially passed the Stablecoins Bill, establishing a licensing regime for fiat-referenced stablecoins (FRS) to regulate digital assets. According to a recent press release, the bill aims to protect investors, reduce financial risks, and support innovation in the city’s growing virtual asset (VA) ecosystem. The Legislative Council approved the bill on 21 May, with the new law expected to take effect later this year.

Licensing Regime to Strengthen Oversight

Under the new law, any entity issuing an FRS in Hong Kong or referencing the Hong Kong dollar—locally or abroad—must obtain a licence from the Monetary Authority (MA). Applicants must meet strict requirements, including proper management of reserve assets, clear redemption processes, and full segregation of client funds.

Furthermore, licensees must comply with anti-money laundering standards, risk controls, auditing protocols, and disclosure obligations. Only licensed institutions can offer FRS products in Hong Kong. Notably, only FRS issued by a licensed issuer may be sold to retail investors.

The Chief Executive of the Hong Kong Monetary Authority, Mr Eddie Yue, stated, “The Ordinance has established a risk-based, pragmatic, and flexible regulatory regime.” He added that this would foster “healthy, responsible, and sustainable development” of Hong Kong’s stablecoin and broader digital asset market.

Tight Controls on Advertising and Investor Protection

Significantly, the ordinance prohibits FRS-related advertisements from unlicensed entities, even during a six-month non-contravention period. The law is designed to prevent fraud and misleading promotions targeting the general public.

The public is urged to verify FRS advertising and remain alert to possible scams. Citizens are permitted by law to run ads exclusively from licensed issuers. It fits with the government’s work to boost investor protection and keep the market fair.

The Secretary for Financial Services and the Treasury, Mr Christopher Hui, emphasized, “The Ordinance adheres to the ‘same activity, same risks, same regulation’ principle,” ensuring consistency and safety across financial sectors.

Related: Bipartisan Vote Pushes GENIUS Act Toward Final Approval

Next Steps for the Virtual Asset Ecosystem

Besides the licensing regime for stablecoins, Hong Kong plans further steps to regulate its virtual asset environment. The government will soon consult the public on over-the-counter trading and custody services. Moreover, it plans to release its second policy statement on virtual asset development. 

These initiatives contribute to Hong Kong’s plan to become a safe, up-to-date, and globally competitive center for finance. Experts believe the Stablecoins Ordinance will set clear standards and increase trust among those involved.

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