Hong Kong has moved closer to formalizing its stablecoin regulations, publishing a bill in its government gazette on December 6 that creates a clear framework for issuers and marketers.
Stablecoins have become useful tools for cross-border transactions, with Standard Chartered recently calling them the crypto industry’s “killer app.”
Under the new bill, stablecoin issuers and marketers must obtain licenses from the Hong Kong Monetary Authority (HKMA). This requirement extends to stablecoins pegged to the Hong Kong dollar. Issuers must maintain reserves with local banks, although the HKMA may occasionally permit foreign depository arrangements.
The legislation outlines strict compliance measures, including a minimum paid-up capital of HK$25 million (over $3 million). Issuers must also demonstrate strong financial health, liquidity and risk management capabilities. Activities such as misrepresentation to promote stablecoins are prohibited to ensure consumer protection and market integrity.
In addition, the HKMA will be given greater powers to monitor, investigate and enforce compliance with this framework.
The initiative reflects Hong Kong’s commitment to tackling financial risks while promoting innovation. Officials have emphasized that the framework aligns with international standards and embodies a principle of applying consistent regulations to similar activities and risks.
Christopher Hui, Minister of Financial Services and the Ministry of Finance, pointed out that the proposal is in line with the principle of “same activity, same risks, same regulations”. This ensures that the framework meets global standards and strengthens Hong Kong’s position as a leading financial centre.
Eddie Yue, Chief Executive of the HKMA, emphasized that the bill incorporates feedback from industry consultations and aims to promote sustainable growth within the stablecoin ecosystem.
The bill will have its first reading in the Legislative Council on December 18. If passed, Hong Kong will join early movers such as the European Union and Japan in regulating stablecoins, while surpassing other jurisdictions such as the US, which have not yet implemented similar frameworks. .
