Hong Kong takes the lead in formally passing stablecoin legislation, targeting the issuance of fiat-pegged stablecoins

While the US stablecoin bill made progress in the Senate, Hong Kong took the lead in formally passing stablecoin legislation.

The Hong Kong Legislative Council has passed the Stablecoin Bill, further establishing a licensing system for issuers of legal currency stablecoins in Hong Kong and improving the regulatory framework for virtual asset activities in Hong Kong to maintain financial stability and promote financial innovation. The bill is expected to take effect this year.

At present, the regulatory authorities have carried out certain supervision and testing on the operating plans of the three institutions in the sandbox.

The Stablecoin Draft Regulations clearly state that the following three types of activities require a license:

1. Issue fiat stablecoins in Hong Kong

2. Issuing Hong Kong dollar stablecoins in or outside Hong Kong

3. Actively promote the issuance of its fiat stablecoin to the Hong Kong public

According to Caixin, citing the sandbox participant "Yuanbi Technology", the draft lists four important requirements for issuers:

* First, in terms of reserves, licensees must maintain a sound stablecoin mechanism to ensure that the reserve assets of stablecoins are composed of high-quality and highly liquid assets (such as assets that may include cash, bank deposits, government bonds, repurchase agreements, reverse repurchase agreements, and money market funds invested in the above assets), and are equal to the face value of the circulating fiat stablecoins at all times, and are properly separated and kept.

* Second, stablecoin holders have the right to redeem stablecoins at par from the issuer. Redemption requests must be free of charge and processed within a reasonable time.

* Third, they must comply with a series of requirements related to combating money laundering, risk management, disclosure, and auditing appropriate personnel.

* Fourth, transactions must be conducted on licensed virtual asset trading platforms.

The draft shows that in terms of issuer qualifications, the license holder must have sufficient financial resources and liquid assets, including a share capital of at least HK$25 million. The license does not have a fixed validity period, that is, the license will remain valid unless it is revoked, or the license holder is liquidated and its registration qualification with the Hong Kong Companies Registry is revoked.

To protect the public and investors, the draft stipulates that only designated licensed institutions are allowed to sell legal currency stablecoins in Hong Kong, and only legal currency stablecoins issued by licensed issuers can be sold to retail investors. The above-mentioned designated licensed institutions that can sell stablecoins in Hong Kong include: stablecoin issuers licensed by the Monetary Authority, banks, institutions issued with a Type 1 license (securities trading) by the Hong Kong Securities and Futures Commission, and virtual asset trading platforms licensed in Hong Kong.

In order to effectively deter, the draft bill sets clear punishment rules for violations. Conducting regulated stablecoin activities without a license: a fine of HK$5 million and seven years in prison; selling stablecoins by non-designated licensed institutions: a fine of HK$5 million and seven years in prison, etc.

As early as October 2022, the Hong Kong SAR Government issued the Policy Statement on the Development of Virtual Assets in Hong Kong, outlining its determination to improve the regulatory framework for virtual assets. In response to the policy statement, the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615) (the Anti-Money Laundering Ordinance) was amended in December 2022 to introduce a licensing system for virtual asset service providers to ensure that virtual asset trading platforms must comply with international regulations on combating money laundering and terrorist financing and protect investors. Following the virtual asset trading platform licensing system taking effect in June 2023, Hong Kong is working to further improve the regulatory framework for virtual asset activities, including introducing a licensing system for issuers of fiat stablecoins.

In December 2023, Hong Kong announced that it would enact new legislation to implement a licensing system for fiat stablecoin issuers. Subsequently, the regulatory sandbox approved three institutions to participate in the test on July 18, 2024, and the draft text was published in December of the same year, and was finally passed by the Legislative Council on May 21, 2025.

At present, the Hong Kong Monetary Authority (HKMA) has launched a sandbox for stablecoin issuers to understand the business model of institutions that intend to issue fiat stablecoins in Hong Kong, and to convey regulatory expectations and provide guidance to them. The first batch of three participating institutions were admitted to the sandbox on July 18, 2024. They include Standard Chartered Hong Kong, Animoca Brands, a group consisting of Hong Kong Telecom, JD CoinChain Technology (Hong Kong), and Yuancoin Innovation Technology.

At present, the regulator has carried out certain supervision and testing on the operating plans of issuers in the sandbox.

It is worth mentioning that JD Technology Group has recently released a number of RWA-related job recruitment information, clearly requiring that product design must be seamlessly connected with JD Stablecoin and digital RMB. At