- All stablecoin issuers must get HKMA licenses.
- Law ensures full AML and reserve compliance.
- Only licensed firms can advertise stablecoins.
Hong Kong has officially passed the Stablecoins Bill, marking a significant step forward in the regulation of digital assets. The legislation mandates that any company issuing fiat-backed stablecoins, particularly those pegged to the Hong Kong dollar or operating within Hong Kong’s jurisdiction, must now obtain a license from the Hong Kong Monetary Authority (HKMA).
The bill proposes a comprehensive regime of licensing with the objective of enhancing market integrity, investor confidence, and the stability of the digital asset ecosystem.
Stringent Compliance and Risk Management Measures
For the new law, licensed issuers must comply with strict compliance and risk management standards. These are:
- Maintaining adequate reserves to back issued stablecoins.
- Ensuring redemption at face value for stablecoin holders.
- Segregation of client assets from company funds.
- Adhering to standards in anti-money laundering (AML), disclosure, audit protocols, and risk management practices.
The government aims to align these measures with global best practices and promote a healthy ecosystem.
Christopher Hui, Secretary for Financial Services and the Treasury, emphasized that the regulation follows the “same activity, same risks, same regulation” principle. This means that entities offering financial services through stablecoins will be subject to the same rules as those offering traditional financial instruments.
The HKMA will also limit the promotion and advertising of stablecoins. Licensed issuers will be the only ones able to promote or advertise their tokens, an effort aimed at avoiding misleading advertising and limiting the possibility of scams in the domestic market.
According to HKMA CEO Eddie Yue, this regulatory approach is designed to foster “a robust and fit-for-purpose regulatory environment,” one that supports responsible and sustainable innovation in stablecoins and other digital assets.
Rising Crypto Adoption in Hong Kong
The law comes at a time of growing public interest in cryptocurrencies. A November 2024 survey by the Hong Kong University of Science and Technology reported that 25% of respondents planned to hold cryptocurrencies, up from 19% in September 2023. The survey also revealed increased confidence in regulated exchanges, pointing to a public appetite for secure, legally compliant crypto services.
Following this, the government of Hong Kong has announced it will introduce further rules governing crypto trading platforms, custodians, and over-the-counter (OTC) service providers over the next few months..
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