Hong Kong has taken an important step in establishing a legal framework for stablecoins by announcing the draft law on December 6, creating a clear legal basis for issuers and marketers of stablecoins, marking progress in regulating digital assets.
Stablecoins are currently considered breakthrough tools for cross-border transactions, with Standard Chartered Bank recently stating that this is the “killer application” of the cryptocurrency industry.
According to the draft, organizations issuing and marketing stablecoins will have to apply for a license from the Hong Kong Monetary Authority (HKMA). This regulation includes stablecoins pegged to the Hong Kong dollar. At the same time, issuers must hold reserve assets at domestic banks, except in special cases where the HKMA allows offshore custody.
The new legal framework also sets strict compliance standards. Issuers must meet a minimum capital requirement of HKD 25 million (over USD 3 million) and demonstrate strong financial capability, high liquidity, and effective risk management capacity. Practices such as distorting information to promote stablecoins will be prohibited to protect consumers and maintain market transparency.
The HKMA has also been granted additional powers to supervise, investigate, and enforce compliance measures under this new framework.
Balancing risk management and promoting innovation
This initiative reflects Hong Kong's commitment to balancing financial risk mitigation and encouraging innovation. Officials emphasize that this legal framework aligns with international standards, applying the principle of “same activity, same risk, same regulation.”
Christopher Hui, Secretary for Financial Services and the Treasury, stated that the legal framework is designed to meet global standards while reinforcing Hong Kong's position as a leading global financial center.
Eddie Yue, CEO of the HKMA, emphasized that the draft law has incorporated feedback from extensive industry consultations. He affirmed that the goal of the legal framework is to promote sustainable development for the stablecoin ecosystem.
The draft law will be presented to the Legislative Council on December 18 for its first reading. If approved, Hong Kong will join a group of pioneering countries like the European Union and Japan in regulating stablecoins. At the same time, Hong Kong will surpass other jurisdictions, such as the United States, where similar legal frameworks are still awaiting implementation.
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