CC Looks at the World | Multiple Perspectives, One Article Clarifying the Impact of the Hong Kong Dollar Stablecoin

Author: Louis, ChainCatcher

Editor: Crypto Luo Xiaohui, ChainCatcher

On May 30, 2025, the Hong Kong Special Administrative Region government published the "Stablecoin Ordinance" in the Gazette, marking the official establishment of the first comprehensive regulation of stablecoins in the Asia-Pacific region. According to the ordinance, all stablecoin projects issued in Hong Kong or pegged to the Hong Kong dollar must obtain a license issued by the Hong Kong Monetary Authority (HKMA). The ordinance is expected to be officially implemented by the end of the year. Currently, no licenses have been issued to any issuers, but stablecoin issuers will be able to apply for licenses and formally enter the licensed operation phase.

++Despite numerous in-depth analyses, many readers still find it difficult to quickly understand the core content of the bill and its market impact. This issue of "CC++ ++Looks at the World" gathers multiple perspectives to help readers sort out the key points and impacts of the Hong Kong dollar stablecoin ordinance.++

Review of the Development of the "Stablecoin Bill"

This year, stablecoins have rapidly developed due to their advantages of efficient transfers, low costs, and information transparency, with a market capitalization rising to $247.48 billion, dominated by dollar-pegged products. However, during this rapid expansion, stablecoins have also exposed three core issues: first, the lack of transparency in reserve assets (e.g., USDT was revealed to be under-reserved); second, the fragility of algorithmic mechanisms (e.g., the UST/LUNA system nearly collapsed to zero); third, excessive reliance on traditional financial institutions (e.g., USDC was depegged due to the collapse of Silicon Valley Bank). These risks have prompted countries to accelerate regulatory legislation for stablecoins. Against this backdrop, the Hong Kong government officially published the "Stablecoin Ordinance Draft" in the Gazette on December 6, 2024, initiating the legislative process. Since the first reading was completed on December 18, 2024, the ordinance was smoothly passed in the third reading on May 21, 2025, in just five months, demonstrating the efficiency and determination of policy promotion.

Core Points of the Hong Kong "Stablecoin Bill"

The bill aims to establish a comprehensive regulatory framework for stablecoins to enhance transparency, prevent systemic risks, and protect investor rights. The bill advocates for a focus on ++fiat-backed stablecoins++ and includes the following core requirements:

• Mandatory Licensing: All issuers must obtain a license from the HKMA.
• Local Entity Requirement: Issuers must be registered in Hong Kong with a paid-up capital of no less than HKD 25 million.
• 1:1 Reserves: Stablecoins must be fully backed by high-quality, liquid assets, consistent with the pegged currency.
• Asset Segregation: Customer assets must be separated from company assets to prevent misappropriation.
• Redemption Mechanism: Holders can redeem at face value at any time under reasonable conditions.
• Compliance Obligations: Including anti-money laundering, risk management, auditing, and information disclosure.
• Advertising Restrictions: Only licensed stablecoins can be advertised to the public to prevent fraud.

++Unlike the United States' "GENIUS++ ++Act," which adopts a dual regulatory structure at both federal and state levels, the Hong Kong bill is regulated by a single entity, the HKMA, and does not mandate that reserve assets be cash or short-term government bonds, nor does it explicitly prohibit interest on stablecoin products. This reflects Hong Kong's pragmatic regulatory approach, leaning towards financial innovation and practical application.++

++In contrast to Singapore's "MAS SCS Framework++ ++," which adopts a voluntary participation system, the Hong Kong "Stablecoin Ordinance" implements a mandatory licensing system. Singapore has not completely banned the issuance and circulation of non-MAS regulated stablecoins, only restricting their use of the "regulated" label; whereas Hong Kong clearly stipulates that only licensed stablecoins can be advertised to the public. This difference reflects a stricter and more comprehensive regulatory framework in Hong Kong, with a greater emphasis on risk control, aiming to create a more secure market environment for consumers.++

What Impacts Will the Ordinance Bring?

(1) Potential Demonstration Effect on Mainland China: The Hong Kong bill may provide a reference compliance path for the mainland and promote the integration of blockchain with the real economy through technology output and standard alignment.

(2) Enhancing Hong Kong's International Financial Competitiveness: Competing with places like Singapore and Dubai for the position of a Web3 financial hub, Hong Kong enhances investor confidence and attracts global capital through compliance legislation.

(3) Injecting New Liquidity into the Crypto Market: As a key channel in the digital asset world, stablecoins will greatly facilitate the development of RWA (real-world asset) trading, on-chain wage payments, cross-border settlements, and Web3 payment infrastructure.

International Voices on the Hong Kong Dollar Stablecoin Approval

1. Chengyi Ong, APAC Policy Director at Chainalysis, stated in an interview with CNBC: "Stablecoins are the backbone of the crypto ecosystem, but their stability also opens the door to overcoming the frictions that plague traditional finance (such as slow cross-border payments and settlements). This potential transformative utility has prompted governments worldwide, from Europe to Asia, to take measures to establish regulatory frameworks to promote the emergence of high-quality stablecoins."

2. YuFeng Gong, Risk and Strategy Director at HashKey OTC, also mentioned: "Hong Kong's new stablecoin policy sets a global benchmark by mandating full reserve backing, strict redemption guarantees, and regulation by the HKMA." This policy "ensures that traders gain institutional-level reliability while positioning Hong Kong as a leader in compliant digital finance."

3. David Katz, Vice President of Strategy and Policy for Circle in the Asia-Pacific region, stated: "Hong Kong has long been a global financial center with a deep and liquid foreign exchange market, supported by a regulatory environment conducive to currency exchange. The pegging of the Hong Kong dollar to the US dollar, along with a strong banking infrastructure, makes it an ideal location for dollar conversions."

4. Fiona Murray, Managing Director for Asia-Pacific at blockchain company Ripple, stated: "Given Asia's status as a global trade center and the huge remittance flows, stablecoins will increasingly be used for real-time settlement of international payments, thereby reducing friction and costs. With stablecoins, users can trade and transfer tokenized assets quickly and efficiently—available around the clock, which is very convenient for both traditional and crypto markets."

5. According to an analysis by Mayer Brown partners Amita Haylock and Justin W. J. Lai, the bill establishes strict licensing, asset backing, and consumer protection measures. By providing clear regulatory standards, the bill is expected to enhance investor and consumer confidence in stablecoins, thereby encouraging more market participation and innovation in digital payment systems and decentralized finance.

6. Evan Auyang, President of Animoca Brands Group, stated: "Hong Kong has raised the regulatory threshold for stablecoins. With the passage of the stablecoin bill, Hong Kong has established a licensing framework and clearly indicated its intention: Hong Kong aims to lead a new chapter in digital finance. By setting strict standards for reserves, redemptions, and risk management, Hong Kong provides truly clear regulation for stablecoin issuers without stifling innovation."

7. Justin d'Anethan, advisor at Liquifi Token Advisory, stated that Hong Kong's latest stablecoin bill provides issuers with a clear regulatory framework. The bill specifies guidelines on reserve management, redemption mechanisms, and licensing procedures, helping to enhance regulatory transparency. He noted that this new regulation shows a friendly attitude towards traditional financial institutions wishing to enter the market, making it somewhat attractive. However, he also admitted that Hong Kong has not yet played a key role in the global stablecoin landscape, and its market share and influence still need to be improved.

8. Moody's, one of the three major credit rating agencies in the United States, stated in a report that the introduction of this regulatory proposal helps eliminate the long-standing regulatory uncertainty in the stablecoin sector in Hong Kong, which has been a key barrier affecting investor confidence and hindering the widespread adoption of stablecoins. These regulations will enhance the transparency and governance quality of stablecoin issuers, constituting a "credit positive" effect for the entire digital asset industry and facilitating future stablecoin adoption.

9. The World Economic Forum wrote in a recent article: "In recent years, governments around the world have been formulating and implementing regulatory frameworks for the widespread use of stablecoins and cryptocurrencies. Experts point out that while fragmented and contradictory regulatory provisions may hinder market development, clear and unified rules help expand the use of stablecoins."

10. In an article on Coin Insider, Fhumulani Lukoto mentioned that the promulgation of this bill is a strategic move to consolidate Hong Kong's position as a global digital asset center. Hong Kong aims to attract reputable stablecoin issuers and promote innovation in the fintech sector by providing clear regulations and strong oversight.