Hong Kong Legislation Advances with Stablecoin Regulations

Hong Kong Legislation Advances with Stablecoin Regulations

Hong Kong has moved to regulate stablecoin issuers through legislation passed by its Legislative Council on May 21, 2025.

The legislation enhances virtual-asset regulatory frameworks , aiming to boost financial stability and innovation.

The Legislative Council of Hong Kong passed the new bill, placing the Hong Kong Monetary Authority (HKMA) in charge of regulating stablecoin issuers. Licensed institutions alone can issue stablecoins to retail investors, marking a change in market operations.

“The Government welcomed the passage of the Stablecoins Bill by the Legislative Council today (21 May) to establish a licensing regime for fiat-referenced stablecoins (FRS) issuers in Hong Kong, to further enhance Hong Kong’s regulatory framework on virtual-asset activities, thereby fostering financial stability and encouraging financial innovation.”

This legislative move impacts fiat-referenced stablecoins significantly, excluding central bank digital currencies and government-issued tokens. The law seeks to improve financial confidence while keeping ethical standards.

Market participants are optimistic, expecting increased investor protection and more defined market guidelines. Fiat-referenced stablecoins such as HKD and USD-backed versions will likely be more prevalent, enhancing both local and international market appeal.

Historically, similar regulations in regions like the European Union have led to improved compliance and clarity. This trend aligns with global attempts to stabilize financial systems amidst rising digital currency use, encouraging further technological and regulatory developments.