Hong Kong stablecoins bill moves closer to approval

Hong Kong's Stablecoins Bill has advanced to the Legislative Council, marking a significant step toward establishing a regulatory framework for stablecoins in the region. 

The bill, published in the government’s Gazette on December 6, had its first reading in the Legislative Council on December 18. 

Before becoming law, the bill will undergo three readings involving debates, detailed examinations, and possible amendments. 

Upon passing the third reading, the legislation will be forwarded to Hong Kong’s chief executive for final approval. 

The proposed law introduces licensing requirements for stablecoin issuers and imposes offering and marketing restrictions aimed at enhancing consumer protections. 

Issuers would be required to obtain licenses from the Hong Kong Monetary Authority (HKMA) and adhere to strict guidelines, including evaluations of their controllers, resources, reserve assets, and mechanisms stabilising their tokens’ value. 

Under the bill, only regulated entities will be permitted to issue or market stablecoins in Hong Kong. 

Broader consumer protections will also apply to market participants, including distributors and platforms offering these digital assets. 

This move aligns Hong Kong with global trends in stablecoin regulation, such as the European Union’s Markets in Crypto-Assets (MiCA) framework. 

In Europe, MiCA regulations have reshaped the stablecoin market, enabling compliant issuers to dominate. 

Research shows that by late 2024, MiCA-compliant stablecoins accounted for 91% of the European market, largely driven by Circle and financial institutions like Societe Generale. 

Hong Kong’s regulatory initiative reflects its intent to build a secure and transparent digital asset ecosystem while maintaining competitiveness in the evolving crypto industry. 

The bill’s final outcome will depend on its progression through legislative scrutiny and approval processes in the coming months.