Hong Kong Stablecoin Issuers Framework The Hong Kong Monetary Authority's regulatory framework for fiat-referenced stablecoin issuers, establishing licensing requirements, reserve standards, and operational obligations under the Stablecoins Ordinance.
Ordinance Passed May 2025
Source: Hong Kong Monetary Authority (HKMA)

What Is Hong Kong's Stablecoin Framework?

Hong Kong has established a comprehensive licensing regime for fiat-referenced stablecoin (FRS) issuers through the Stablecoins Ordinance, passed in May 2025. The framework positions Hong Kong as a regulated hub for stablecoin activity in Asia, complementing its existing virtual asset service provider regime.

The HKMA serves as the primary regulator for stablecoin issuers, with the Securities and Futures Commission retaining jurisdiction over virtual asset trading platforms.

What Stablecoins Are Covered?

Fiat-Referenced Stablecoins

  • Tokens purporting to maintain stable value relative to fiat currency
  • Both HKD-referenced and foreign currency stablecoins
  • Issued in Hong Kong or actively marketed to HK public

Exclusions

  • Stablecoins used only among licensed institutions
  • Limited-purpose stored value facilities
  • CBDCs and central bank-issued instruments
  • Deposit products of authorized institutions

How Does Licensing Work?

License Requirements

  • HKMA authorization required for issuers
  • Hong Kong incorporated company or registered non-HK company
  • Fit and proper management
  • Adequate financial resources
  • Appropriate operational arrangements

Application Process

  • Detailed application to HKMA
  • Business plan and operational documentation
  • Compliance program assessment
  • Ongoing supervisory relationship

What Are the Key Requirements?

Governance

  • Board-level oversight of stablecoin operations
  • Senior management accountability
  • Robust risk management framework
  • Internal controls and audit

Operational Standards

  • Cybersecurity and operational resilience
  • Business continuity planning
  • Outsourcing governance
  • Record-keeping requirements

Consumer Protection

  • Clear disclosure of risks and rights
  • Fair dealing obligations
  • Complaint handling procedures
  • Marketing restrictions

What Are the Reserve Requirements?

Reserve Composition

  • High-quality liquid assets backing
  • Cash, bank deposits, or government securities
  • Denominated in the reference currency
  • Held with authorized institutions in Hong Kong

Reserve Management

  • 100% backing requirement
  • Segregation from operational assets
  • Regular valuation and reconciliation
  • Independent audit and attestation

Redemption

  • Face value redemption guaranteed
  • Timely processing required
  • Clear procedures disclosed
  • Reasonable redemption terms

What Should Financial Institutions Consider?

Strategic Positioning

  • Hong Kong as gateway to Greater China and Asia
  • Regulatory clarity attracts institutional participation
  • Complement to VASP license for comprehensive offering
  • Cross-border opportunities with other jurisdictions

Compliance Planning

  • Reserve custody with HK authorized institutions
  • Local governance and risk management
  • Regulatory reporting infrastructure
  • Integration with existing HK operations

The Coinbax Perspective

Hong Kong's framework reflects a balance between enabling innovation and maintaining financial stability. The HKMA's role as regulator brings banking-sector expertise and credibility to stablecoin oversight.

The requirement for HK-based reserve custody is significant—it ensures that reserves remain within Hong Kong's regulatory perimeter and legal system. For issuers, this means building relationships with Hong Kong's banking sector.

For financial institutions, Hong Kong offers access to Asian markets with a familiar common law legal system and regulatory approach. The framework's clarity reduces uncertainty for institutional participation.

Frequently Asked Questions

When does the framework take effect?

The Stablecoins Ordinance was passed in May 2025, with implementation phased to allow existing operators to apply for licensing.

Can non-HKD stablecoins be issued?

Yes. The framework covers fiat-referenced stablecoins regardless of the reference currency, including USD-referenced stablecoins marketed to Hong Kong residents.

How does this relate to the VASP regime?

The stablecoin issuer regime is separate from but complementary to the VASP (virtual asset service provider) regime. Trading platforms handling stablecoins need VASP licenses; issuers need HKMA authorization.