Hong Kong Approves Groundbreaking Stablecoin Law, Laying the Foundation for Sustainable Digital Finance
Hong Kong marked a major turning point in its digital finance strategy on May 21 when the Legislative Council passed the landmark Stablecoin Bill. The new law establishes a strict legal framework requiring all issuers of fiat-denominated stablecoins — especially those pegged to the Hong Kong dollar — to be licensed if they wish to operate in or access the Hong Kong market.
The move was confirmed by the Hong Kong Monetary Authority (HKMA) as a key part of its efforts to transform Hong Kong into a leading global digital finance hub, while protecting investors and maintaining the stability of the virtual asset market.
Under the new rules, stablecoin (FRS) issuers will have to comply with a series of strict requirements, including:
Separately managing and safeguarding reserve assets,
Maintaining a mechanism to ensure the ability to redeem stablecoins at face value,
Complying with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations,
Transparent disclosure, regular audits, and rigorous risk management.
In addition, only HKMA-licensed entities will be allowed to distribute stablecoins to retail investors or promote their services — even during the initial six-month transition period after the law comes into effect.
HKMA Chief Executive Eddie Yue said:
“The Ordinance represents a risk-based, flexible, and pragmatic regulatory regime. It facilitates the safe, responsible, and sustainable development of stablecoins in Hong Kong and the entire digital asset ecosystem.”
Secretary for Financial Services and Finance Christopher Hui also stressed that the new law adheres to the principle of “shared operations, shared risks, shared regulations”, and is a stepping stone to building an orderly, transparent and trustworthy digital asset market.
The Hong Kong Government said it will continue to promote further consultations on virtual asset custody services and future regulatory initiatives, reinforcing its commitment to supporting regulated innovation in the Web3 and digital finance sectors.
The passage of the Stablecoin Bill shows that Hong Kong not only wants to keep up with global trends, but is also ready to take the lead in building a strong legal foundation for the future of digital finance.