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Introduction
The Stablecoins Ordinance (Cap. 656) (the “Ordinance“) came into effect on 1 August 2025, which primarily regulates activities related to the offering, issuance and marketing of specified stablecoins. This marks a significant step in Hong Kong’s strategy to position itself as a global hub for digital finance. The Hong Kong Monetary Authority (“HKMA“) has issued the following documents (“HKMA Guidelines“) to set out further detailed requirements and practical guidance for the implementation of the stablecoin licensing regime in Hong Kong:
The scope of regulated stablecoin activities under the Ordinance
A “specified stablecoin”, as defined under the Ordinance, primarily refers to a stablecoin[1] that purports to maintain a stable value with reference wholly to official currencies (commonly referred to as a “fiat-referenced stablecoin”), or other units of account or stores of economic value specified by the HKMA. The Ordinance primarily regulates the following types of regulated stablecoin activities:
(i) issuing specified stablecoins in Hong Kong;
(ii) issuing specified stablecoins outside Hong Kong referencing the Hong Kong dollar; and
(iii) actively marketing, whether in Hong Kong or elsewhere, the issuance of specified stablecoins to the Hong Kong public (or a class of that public).
As set out in the Explanatory Note on Licensing of Stablecoin Issuers, subject to the facts and circumstances of each case, a specified stablecoin is typically considered “issued” (or “minted“) when it is first recorded on a distributed ledger (or similar information repository), and assigned to a digital wallet address.
In determining whether a specified stablecoin is “issued in Hong Kong“, the HKMA will take a holistic approach and consider all relevant factors, including but not limited to: (i) where the day-to-day management and operations of the issuer take place; (ii) where the issuer is incorporated; (iii) where the minting and burning of the specified stablecoin take place; (iv) where the reserve assets are managed; and (v) where the bank accounts for processing the cash flows arising from minting or redemption requests are maintained.
Further, in determining the scope of “actively marketing” to the Hong Kong public, the HKMA will also take a holistic approach and consider all relevant factors, including but not limited to: (i) what language is used in the marketing messages, e.g. does it include Chinese; (ii) whether it is targeted at a group of people residing in Hong Kong; (iii) whether a Hong Kong domain name is used; and (iv) whether there is a detailed marketing plan to promote the activity.
The Licensing Regime: Key requirements
Any person who carries on, or holds out as carrying on, a regulated stablecoin activity (a “stablecoin issuer“) must be licensed by the HKMA and fulfil the minimum criteria set out in Schedule 2 of the Ordinance on an ongoing basis. The Supervisory Guideline further elaborates on the minimum criteria by setting detailed regulatory expectations and guidance for licensed stablecoin issuers (“licensees“). Please click here to access a summary of the key requirements.
Application procedures
Preliminary consultation
Entities interested in applying for a license are encouraged to proactively engage with the Stablecoin Licensing Team of the HKMA to express their interest, present their business models, and demonstrate a solid understanding of the licensing criteria.
Where an interested entity is headquartered or conducts business overseas, the HKMA may consult with the relevant overseas regulators on whether the entity and/or its parent company is financially sound, stable, and suitable to undertake regulated stablecoin activities in Hong Kong. Accordingly, any foreign interested entity is advised to coordinate with its parent company and consult its home regulators prior to consultation with the HKMA to avoid any unnecessary delay in its application.
Submission and completion of application
At present, the licensing application form is not publicly available and may only be obtained directly from the Licensing Team after the preliminary consultation with the HKMA.
In addition to the application form, applicants are required to submit supporting documentation to demonstrate an applicant’s due incorporation and capacity, business plans and projections, policies and procedures and systems of control, financial soundness, and readiness to comply with the minimum criteria and other regulatory requirements. The HKMA may also request for further supplemental information from time to time. A comprehensive list is set out in Annex B of the Explanatory Note on Licensing of Stablecoin Issuers.
The HKMA invites interested entities to express their intent by 31 August 2025 and to submit formal applications by 30 September 2025. Nevertheless, the HKMA has indicated that the bar for licensing is high, and it only expects to grant the first licenses to a “handful” of applicants at the initial stages.
Transitional arrangements for pre-existing issuers
As explained in the Explanatory Note on Transitional Provisions for Pre-existing Stablecoin Issuers, the HKMA sets out transitional arrangements for entities that were carrying on regulated stablecoin activities prior to 1 August 2025 (the “Pre-existing Issuers“). Pre-existing Issuers who wish to continue to carry on regulated stablecoin activities should submit the following documents (“Relevant Documents“) to the HKMA by 31 October 2025:
Pre-existing Issuers that have submitted the Relevant Documents and have received a written acknowledgement from the HKMA may be granted a provisional license to continue to carry on regulated stablecoin activities for a transitional period of six months (i.e. until 31 January 2026). Thereafter, if the HKMA grants a full license to that Pre-existing Issuer, its provisional license will cease to be in force, and as a licensee, it must continue to comply with all regulatory requirements.
Alternatively, if a Pre-existing Issuer does not wish to apply for a license or fails to submit the Relevant Documents by 31 October 2025, or Pre-existing Issuers whose application was subsequently withdrawn, or was rejected or refused by the HKMA, it will enter a 1-month closing-down period (commencing on 1 November 2025 or from the date of withdrawal, rejection or refusal) to wind down its business according to the specific requirements imposed by the HKMA. Any non-compliance with the regulatory requirements during the closing-down period constitutes an offence under the Ordinance.
Next steps
The implementation of the stablecoin licensing regime in Hong Kong marks a pivotal development in the global regulatory framework for digital assets, establishing robust standards for transparency, prudence, and investor protection in the offering, issuance and marketing of specified stablecoins in Hong Kong. However, the HKMA has also emphasized the need for continued vigilance as the regulatory landscape continues to evolve. Stakeholders are strongly recommended to proactively engage with the HKMA and align their operations with regulatory requirements and expectations to ensure the sustainable development of stablecoins in Hong Kong.
For further information or advice regarding the stablecoin licensing regime, please do not hesitate to contact us.
[1] A “stablecoin” is defined under the Ordinance as a cryptographically secured digital representation of value that—
(a) is expressed as a unit of account or store of economic value;
(b) is used, or intended to be used, as a medium of exchange accepted by the public for any one or more of the following purposes: (i) payment for goods or services; (ii) discharge of a debt; (iii) investment;
(c) can be transferred, stored or traded electronically;
(d) is operated on a distributed ledger or similar information repository; and
(e) purports to maintain a stable value with reference to (i) a single asset; or (ii) a pool or basket of assets.
However, the definition excludes central bank issued digital currencies, limited purpose digital tokens, certain securities or futures contracts, float stored in stored value facilities (SVF) or SVF deposits, and bank deposits, which are subject to other existing regulatory regimes.