Hong Kong lawmakers passed a law that establishes a regulatory regime for stablecoins

A stablecoin is a type of cryptocurrency that is pegged to a specific reserve asset, such as the US dollar or any fiat currency.

Hong Kong lawmakers on Wednesday passed a law that establishes a regulatory regime for stablecoins, paving the way for issuers to obtain licences and sell the digital assets to the public.

The bill, which was passed at the Legislative Council meeting, marks a key step in Hong Kong’s broader efforts to become a leading centre for digital assets in the region. It follows a consultation that the Hong Kong Monetary Authority (HKMA) launched in January.

A stablecoin is a type of cryptocurrency that is pegged to a specific reserve asset, such as the US dollar or any fiat currency.

“The ordinance has established a risk-based, pragmatic, and flexible regulatory regime,” Eddie Yue Wai-man, chief executive of the HKMA, said in a statement on Wednesday. A “robust and fit-for-purpose regulatory environment” would support the “healthy, responsible and sustainable development” of Hong Kong’s ecosystem for stablecoins and digital assets more broadly, Yue said.

Globally, stablecoin trading volume reached US$27.6 trillion in 2024, according to a report by cryptocurrency exchange operator CEX.io, surpassing the combined volume of Visa and Mastercard transactions over the same period.

HKMA said it would soon conduct further consultations on details of the regime, such as reserve requirements, client asset segregation, risk management, disclosures and other issues.