Key Notes
- Hong Kong regulators will prioritize expanding real-world stablecoin use cases in retail, cross-border trade, and peer-to-peer transactions.
- The framework mandates fiat-backed stablecoins, ensuring strong regulatory standards and market confidence.
- The stablecoin legislation complements Hong Kong's broader push for Web3 development, alongside new cryptocurrency staking regulations.
In a major step towards becoming the global Web3 hub, the Hong Kong Legislative Council passed the “Stablecoins Bill” in its third reading. Interestingly, the decision came just a day after the US stablecoin bill, known as the GENIUS Act , advanced to the Senate for approval.
This landmark legislation will allow major institutions to apply for stablecoin issuance licenses from the Hong Kong Monetary Authority (HKMA) by the end of the year. As per the new framework , firms can introduce Hong Kong stablecoins backed by fiat currency, ensuring strong regulatory standards and market confidence.
In a major Web3 push for the region, authorities are also sending open invitations to global enterprises interested in issuing stablecoins to apply under the new regime. Speaking on the development, Christopher Hui, the Secretary for Financial Services and the Treasury, noted:
“This is not only in line with international regulatory requirements, but also lays a solid foundation for Hong Kong’s virtual asset market, which, in turn, promotes the sustainable development of the industry, protects users’ rights and interests, and strengthens Hong Kong’s status as an international financial centre”.
Hong Kong to Focus on Two Key Areas for Stablecoin Ecosystem Growth
With the introduction of the Stablecoins Bill, Hong Kong regulators are willing to address two key areas of growth, like real-world applications and ensuring market stability.
- Expanding Real-World Applications: While stablecoin issuance is the beginning, the emphasis will now shift to developing practical use cases in retail, cross-border trade, and peer-to-peer transactions. Businesses in traditional sectors are encouraged to adopt stablecoins as a revolutionary financial tool.
- Strengthening Market Stability: The framework includes measures like offering interest earnings to stablecoin holders, which aim to enhance their competitiveness and encourage wider adoption. These initiatives are expected to solidify stablecoins’ market position and ensure sustainable growth.
With this legislative milestone, Hong Kong reinforces its commitment to advancing Web3 innovation both in Asia and on the global stage. In addition to this, regulators are actively inviting industry stakeholders to collaborate in shaping the future of stablecoins and to help build a strong, resilient Web3 ecosystem anchored in Hong Kong.
This development comes a month after Hong Kong’s Securities and Futures Commission (SFC) unveiled new regulations for cryptocurrency staking services , marking another step in the region’s commitment to fostering Web3 development.
As per the SFC, these rules strike a balance between supporting innovation in the digital asset space and ensuring robust investor protection.
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