Hong Kong Greenlights Stablecoin Licensing Bill Following U.S. Move: A New Phase in Global Digital Asset Regulation

Specifics and Significance of the Bill

The passing of the Stablecoin Bill provides a clear regulatory framework for fiat-backed stablecoin issuers. According to the bill's content, stablecoin issuers must meet several key requirements:

1. Asset Reserve Management: Issuers are required to maintain proper segregation of customer assets, ensure robust stabilization mechanisms, and handle redemption requests from stablecoin holders at face value under reasonable conditions.

2. Compliance and Risk Management: Issuers must meet anti-money laundering (AML) and counter-terrorist financing (CTF) standards, adhere to risk management protocols, and fulfill disclosure, audit, and fit-and-proper requirements.

3. Licensing and Sale Restrictions: Only licensed entities are permitted to sell fiat-backed stablecoins in Hong Kong, and retail sales are limited to stablecoins issued by licensed issuers. Additionally, advertisements related to unlicensed stablecoin issuers are prohibited to prevent fraud.

Hong Kong Legco member @Johnny_nkc further commented on X, "Hong Kong's stablecoins are backed by fiat currency as the underlying asset, and we welcome global businesses and institutions to apply for issuing stablecoins in Hong Kong."

The passage of this bill not only signifies an innovative breakthrough in Hong Kong's digital asset regulation but also lays a solid foundation for future fintech development. This move aims to align with stablecoin regulatory frameworks in regions such as the EU and the US, ensuring its competitiveness in the global market.

Industry Response and Technical Support

The passage of this bill has elicited a positive response from the blockchain industry. HashKey Chain, a significant blockchain technology company based in Hong Kong, announced its full support for the development of stablecoins in Hong Kong.

HashKey Chain plans to build a comprehensive on-chain infrastructure to support the issuance, circulation, and management of stablecoins. The company also plans to launch a frictionless, 1:1 on-chain stablecoin swap tool to enhance liquidity and technical accessibility.

The CEO of HashKey Chain stated, "Stablecoins will become the core hub of the on-chain financial system and the key starting point for integrating on-chain value flow with traditional finance."

Hong Kong's Global Positioning and Competitive Advantage

In recent years, with the rapid development of blockchain technology and digital assets, the Hong Kong government has been actively promoting regulatory frameworks for cryptocurrencies and stablecoins to ensure its competitiveness in this emerging field.

According to data from the Hong Kong Monetary Authority, by the end of 2024, the number of fintech companies in Hong Kong had exceeded 800, with many focusing on blockchain technology and digital asset services. The Hong Kong government has also implemented a series of policy measures, including tax incentives and technical support, to attract leading global cryptocurrency companies and investors.

These efforts not only consolidate Hong Kong's status as an international financial center but also give it a head start in the global competition for stablecoin regulation.

Global Context and Future Outlook

Hong Kong's move aligns with the stablecoin regulatory efforts of other major economies globally. For example:

• European Union: The EU has implemented the Markets in Crypto-Assets Regulation (MiCA), providing detailed regulatory guidelines for stablecoin issuers.

• United States: The U.S. Senate recently passed the GENIUS Act, which is the first comprehensive stablecoin regulatory framework in the U.S.

These initiatives indicate that stablecoins have become an integral part of the global financial system. With Hong Kong passing the Stablecoin Bill, the region's position in the global competition for stablecoin regulation is further enhanced.

A Strategic Step Toward Global Leadership

The passage of Hong Kong's stablecoin licensing bill marks a critical step in the region's efforts to establish itself as a global leader in digital finance. By aligning with international regulatory standards, Hong Kong has set a benchmark for stablecoin governance, fostering transparency and innovation in the industry.

Looking ahead, institutions are expected to be able to apply to the Hong Kong Monetary Authority (HKMA) for stablecoin issuer licenses by the end of 2025. This move underscores Hong Kong's commitment to creating a robust and compliant environment for digital assets, further strengthening its position as a global financial and Web3 hub.

As more regions adopt comprehensive stablecoin regulations, Hong Kong's proactive approach will likely serve as a model for others, driving the global financial system toward greater efficiency and integration with blockchain technology.