Starting August 1, 2025, Hong Kong will implement the Stablecoin Ordinance, which criminalizes the promotion of unlicensed stablecoins to retail investors, imposing fines up to HK$50,000 and potential imprisonment for up to six months.

This regulation aims to prevent speculative trading and ensure compliance with financial oversight, aligning Hong Kong's digital asset framework with global standards.

The framework is designed to enhance financial stability and consumer protection while providing clarity for stablecoin issuance and use.

HKMA Chief Executive Eddie Yue has emphasized the need for credibility and investor protection in the stablecoin sector, warning investors about unlicensed offerings that could inflate stock prices.

This early adoption of stablecoin regulations positions Hong Kong competitively within the Asian crypto sector, especially as many jurisdictions are still determining their regulatory approaches.

Currently, over 40 companies, including major players like Ant Group and Standard Chartered, are seeking stablecoin licenses, although many proposals remain in early development stages.

The HKMA plans to issue licenses to only a limited number of applicants initially, as many current applications lack sufficient risk management and technical expertise.

The introduction of criminal penalties alongside financial fines marks a significant shift in regulatory oversight, aiming to enhance transparency and ensure stablecoin issuance aligns with financial stability objectives.

The HKMA aims to protect consumers and maintain the security of Hong Kong's financial system by avoiding unstable projects and addressing concerns over market volatility driven by hype.

Under the new ordinance, promotions of fiat-referenced stablecoins to the public will require licensing from the HKMA, while professional investors will still have access to unlicensed offerings.

The licensing regime will apply to both issuers and service providers, with strict anti-money laundering standards expected to be enforced.

To ensure transparency in the licensing process, the HKMA plans to release supervisory guidelines by July 31 and an explanatory note on license evaluations on July 25.