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Hong Kong's Stablecoin Rules Set Gold Standard for Digital Finance

Hong Kong's Stablecoin Rules Set Gold Standard for Digital Finance

ainvest2025/08/29 07:45
By:Coin World

- Hong Kong enacted the Stablecoins Ordinance (Cap. 656) on August 1, 2025, establishing a legal framework for fiat-referenced stablecoins to position the city as a global digital asset hub. - The ordinance mandates HKMA licensing for stablecoin issuers, requiring HK$25 million minimum capital and full backing by high-quality liquid assets like government bonds. - Strict AML/cybersecurity protocols and market reactions, including BitMart withdrawing VASP applications, highlight the regulatory rigor balanci

Hong Kong’s recent enactment of the Stablecoins Ordinance (Cap. 656) marks a pivotal regulatory development, positioning the city as a key player in the global digital asset ecosystem. Effective since August 1, 2025, the ordinance establishes a comprehensive legal framework for the issuance and trading of fiat-referenced stablecoins, focusing on instruments tied to official currencies or other units of value designated by the Hong Kong Monetary Authority (HKMA). Notably, the framework excludes central bank digital currencies, bank deposits, and securities, emphasizing its specificity to stablecoins designed for stable value pegs.

Under the ordinance, stablecoin issuers must obtain a license from the HKMA, with the licensing process being phased and invitation-only. A minimum capital requirement of HK$25 million is enforced, and all issued stablecoins must be fully backed at all times by high-quality, liquid assets such as short-term government bonds. The HKMA has also mandated rigorous anti-money laundering (AML) and cybersecurity protocols, requiring continuous monitoring of stablecoin circulation and due diligence on customer wallet ownership, regardless of whether the wallets are custodial or unhosted. These measures aim to ensure institutional credibility and public trust in stablecoin operations.

The ordinance’s implementation has had immediate effects on market participants. For example, BitMart and other major exchanges recently withdrew their applications for virtual asset service provider licenses in Hong Kong, citing the stringent regulatory landscape. The licensing regime for stablecoin issuers mirrors the high capital and operational requirements already imposed on crypto exchanges, including mandatory cold storage of 98% of client assets and insurance coverage for both hot and cold storage holdings. These conditions reflect a broader regulatory push to balance innovation with risk mitigation, ensuring Hong Kong’s digital asset market remains both competitive and compliant.

The ordinance aligns with Hong Kong’s broader strategy to become a global financial hub for digital assets. The city's flexible approach to multicurrency stablecoins—supporting not only the Hong Kong and U.S. dollars but also the offshore renminbi—highlights its strategic positioning to facilitate cross-border payments. This development is particularly significant for the internationalization of the RMB, as it provides a legal foundation for RMB stablecoins that can potentially reduce reliance on SWIFT and other centralized systems. The ordinance could therefore support faster, cheaper, and more transparent transactions, especially in emerging markets and for everyday consumers.

The regulatory framework also intersects with the growing trend of asset tokenization, where real-world assets (RWAs) such as real estate, commodities, and financial instruments are represented on the blockchain. The RWA tokenization market is projected to reach $16 trillion by 2030, driven by institutional and decentralized finance (DeFi) collaboration. The tokenization of U.S. Treasuries alone is expected to reach $4.2 billion in 2025, with short-term bonds leading the way. However, regulatory challenges persist, including varying legal treatment across jurisdictions and the need for standardized risk controls. Skynet’s 2025 RWA Security Report highlights that cybersecurity and smart contract vulnerabilities remain a concern, emphasizing the need for robust custodians and regulated infrastructure.

Hong Kong’s regulatory clarity and infrastructure development may help bridge the gap between tokenized assets and traditional financial systems. As the city moves forward with its stablecoin and RWA frameworks, it aims to attract institutional capital by offering transparency, liquidity, and legal certainty. The integration of blockchain technology into capital markets is seen as a transformative force, potentially unlocking trillions in previously illiquid assets.

The city’s efforts to create a compliant digital asset environment are also evident in the collaboration between traditional banks and blockchain-native firms. For instance, CMB International Securities Limited, a subsidiary of China Merchants Bank, has launched a crypto exchange in Hong Kong. This collaboration reflects a broader industry trend toward hybrid financial models that combine the strengths of traditional finance with the efficiencies of DeFi and blockchain.

In summary, Hong Kong’s Stablecoins Ordinance is a strategic move to establish the city as a leading digital asset hub. By setting high standards for stablecoin issuance and custody, while embracing RWA tokenization, the city is laying the groundwork for a robust, innovative, and compliant digital financial ecosystem. As global finance continues to evolve, Hong Kong’s regulatory approach offers a blueprint for balancing innovation with stability, attracting both institutional and retail participants to its digital markets.

Hong Kong's Stablecoin Rules Set Gold Standard for Digital Finance image 0
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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