Hong Kong Legislative Council Officially Passes the "Stablecoin Bill": Issuers Must Apply for a License from the Financial Management Commissioner

The Hong Kong government welcomes the Legislative Council's passage of the "Stablecoin Ordinance Bill" today (May 21), which establishes a licensing system for fiat-backed stablecoin issuers in Hong Kong, enhancing the regulatory framework for virtual asset activities in Hong Kong to maintain financial stability while promoting financial innovation. After the implementation of the "Stablecoin Ordinance," anyone issuing fiat-backed stablecoins in Hong Kong during business operations, or issuing fiat-backed stablecoins claiming to be pegged to the Hong Kong dollar value in or outside Hong Kong, must apply for a license from the Monetary Authority. Relevant parties must also comply with a series of requirements on anti-money laundering and counter-terrorist financing, risk management, disclosure regulations, auditing, and suitability. The Monetary Authority will further consult on the detailed regulatory requirements of the system in due course. Additionally, the ordinance only allows designated licensed institutions to sell fiat-backed stablecoins in Hong Kong, and only fiat-backed stablecoins issued by licensed issuers can be sold to retail investors. To prevent fraud, at any time (including the six-month non-violation period), only advertisements related to licensed fiat-backed stablecoin issuance will be permitted.