Hong Kong is preparing to implement a comprehensive regulatory framework for stablecoins by August 2025, overseen by the Hong Kong Monetary Authority (HKMA).

To obtain a license, entities issuing fiat-referenced stablecoins in Hong Kong must comply with new requirements, such as maintaining full reserves and segregating client assets, to ensure stability and protect investors.

The new regulations are designed to enhance financial stability, align with international trends, and support growth in the institutional stablecoin market, which is part of a broader strategy to modernize Hong Kong’s financial ecosystem.

The regulatory regime seeks to integrate stablecoins into the mainstream financial system, improving cross-border payments and encouraging institutional participation.

The HKMA is expected to grant only a limited number of licenses, likely in the single digits, to stablecoin issuers that meet strict criteria, including full backing by high-quality liquid assets.

This move aims to attract major players from the digital asset sector, including big tech firms and financial institutions, fostering innovation and positioning Hong Kong as a leader in global digital finance.

Authorities are also working to streamline regulation for tokenized instruments and clarify tax treatments for tokenized ETFs, promoting secondary market activity and broader asset tokenization.

Over 40 major companies, including Chinese giants like Ant Group and JD.com, are preparing to apply for licenses, reflecting strong interest from large firms aiming to leverage stablecoins for international transfers and large-scale issuance.

Hong Kong’s stablecoin initiative is positioning the city as a global leader in digital assets, attracting innovative financial technologies and enhancing its competitiveness.

The government also plans to promote the tokenization of a wider range of assets, such as government bonds and precious metals, to boost financial efficiency and create a seamless digital economy.

Hong Kong’s Financial Secretary emphasizes that stablecoins should be viewed as tools for financial innovation and development, not just speculative assets, aligning with global regulatory trends.

A key requirement of the new rules is that stablecoins must be fully backed by high-quality, liquid reserves, with issuers required to maintain full asset reserves and segregate client assets for stability and investor protection.