Hong Kong Introduces Licensing for HKD-Linked Stablecoins

Hong Kong has introduced a formal licensing regime for stablecoin issuers, marking a new chapter in how the city governs crypto assets. On May 21, the Hong Kong Monetary Authority (HKMA) confirmed the Legislative Council passed the Stablecoins Bill, requiring all fiat-referenced stablecoin (FRS) issuers linked to the Hong Kong dollar to obtain a license—whether operating locally or abroad.

Good to know

• Only licensed issuers can offer or advertise stablecoins in Hong Kong.
• Issuers must maintain proper reserves and allow redemption at par.
• The law includes a six-month transition period with strict compliance rules.

Under the new law, any business offering FRS products must meet specific standards related to reserve management, client asset segregation, and stablecoin redemption at par value. Licensees must also comply with anti-money laundering measures, financial audits, risk disclosures, and governance requirements.

According to the HKMA, advertising stablecoins will only be permitted if issued by licensed entities—even during the law’s six-month transitional period.

The move is part of Hong Kong’s broader strategy to become a hub for digital asset innovation, while keeping financial risks under control. HKMA Chief Executive Eddie Yue said, “The Ordinance has established a risk-based, pragmatic, and flexible regulatory regime. We believe that a robust and fit-for-purpose regulatory environment would provide favourable conditions to support the healthy, responsible, and sustainable development of Hong Kong’s stablecoin and the broader digital asset ecosystem.”

Only approved institutions will be able to offer FRS products to retail users. The government plans further consultation rounds to fine-tune the details of the new regulatory structure. Future initiatives may include oversight for virtual asset over-the-counter (OTC) trading and custody services.

Christopher Hui, Secretary for Financial Services and the Treasury, reinforced the government’s position on applying consistent oversight, noting that the framework follows the “same activity, same risks, same regulation” principle. He added that the Stablecoins Bill creates a strong foundation for the continued development of the virtual asset industry in Hong Kong.