The Hong Kong Stablecoins Ordinance establishes a regulatory framework for stablecoins administered by the Hong Kong Monetary Authority ("HKMA"). It came into operation on August 1, 2025. It regulates the issuance and the offer of stablecoins tied to fiat currencies, establishing a licensing regime for issuers and restricting the offer of such stablecoins to regulated entities, including virtual asset trading platform licensees, licensed securities dealers and banks. Under the licensing regime, most notably, stablecoins must be fully backed and issuers must generally hold underlying instruments denominated in the fiat currency to which the stablecoin issued by that issuer relates. If you'd like more information about the regulation of virtual assets or stablecoins in Hong Kong, please contact one of our FinTech lawyers.
What Constitute In-scope Stablecoins?
Under the Hong Kong Stablecoins Ordinance, a "stablecoin" is defined as cryptographically secured digital representation of value that has the following characteristics:
- It is expressed as a unit of account or store of economic value
- It acts as a medium of exchange for payment, debt settlement, or investments
- It is electronically transferred, stored or traded
- It operates on a distributed ledger or similar information repository, and
- It purports to maintain a stable value with reference to a single or a basket of assets.
The stablecoins legislation specifically excludes from the definition of a "stablecoin":
- Central bank or government digital assets
- Limited-purpose digital tokens, defined under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO)
- Securities or futures contracts, regulated under the Securities and Futures Ordinance
- Float or SVF deposits, regulated under the Payment Systems and Stored Value Facilities Ordinance
- Deposits, regulated under the Banking Ordinance
What Stablecoin Activities Are Regulated?
There are two activities regulated under the Hong Kong Stablecoins Ordinance, namely: the issuance of specified stablecoins and the offering of specified stablecoins.
Issuance of Stablecoins
Whilst the stablecoins legislation itself does not define the term "issue", according to the HKMA, a 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.
A licence by HKMA is required in order to, in the course of business:
- issue a specified stablecoin in Hong Kong, or
- issue a specified stablecoin linked to Hong Kong dollars (whether wholly or partly) whether within or outside Hong Kong.
If a specified stablecoin is not linked to Hong Kong dollars, there is some uncertainty as to how to determine whether it is issued "in Hong Kong", given the decentralized feature of stablecoins and the global nature of crypto business.
Offering of Stablecoins
The meaning of "offer" is defined under the Hong Kong Stablecoins Ordinance. For example, Person A offers a specified stablecoin to Person B where:
- Person A makes any form or means of communication to Person B in the course of business
- Sufficient information is presented on:
- the stablecoin to be offered
- the terms on which the stablecoin will be offered, and
- the channels through which the stablecoin will be offered
- To enable Person B to decide whether to acquire such stablecoin from Person A
Only permitted offerors can offer specific stablecoins, including:
- Stablecoin issuers regulated by the HKMA
- Virtual Asset Trading Platform (VATP) operators regulated by the SFC
- Corporations licensed by the SFC for Type 1 regulated activity (dealing in securities)
- Authorized Institutions (i.e. banks) regulated by the HKMA
- Stored value facility operators regulated by the HKMA
Offerors should be mindful as to the type of investors they can target. A distinction is drawn based on the regulatory status of the relevant stablecoin issuer:
- Those issued by non-HKMA-licensed stablecoin issuers can only be offered to professional investors
- Those issued by HKMA-licensed stablecoin issuers can be offered to both retail and non-retail investors.
Holding Out, Active Marketing and Advertisements
Mirroring the securities and futures and virtual asset regulatory regimes, the restrictions on the issuance and offer of stablecoins extend to any person who:
- holds itself out as issuing or offering a specified stablecoin,
- actively markets , regardless of whether in or outside Hong Kong, to the Hong Kong public that it carries on either of the activities, or
- publishes, or possesses for the purpose of publication, an advertisement to hold the advertised person out as carrying on either of the activities, knowing that the advertised person is not a licensed issuer or a permitted offeror.
Timeline and Transitional Period
The Hong Kong Stablecoins Ordinance came into effect on August 1, 2025.
No Offering Except Permitted Offeror
The restrictions on the offering of specified stablecoins have already taken effect, with no transition period.
Transition Period for Pre-existing Stablecoin Issuers
To allow time for issuers to prepare and submit licensing applications and for the HKMA to process the same, the stablecoins legislation includes transitional arrangements for pre-existing issuers of specified stablecoins in Hong Kong:
- 3-month non-contravention period by October 31, 2025 – A pre-existing issuer will not contravene the Hong Kong Stablecoins Ordinance by carrying on or holding itself out as issuing specified stablecoins during the first 3 months.
- During this time, such issuer should submit a licensing application to the HKMA if it wishes to continue its business. If not, it will need to close down the business.
- Provisional licences may be granted by February 1, 2026 – If the HKMA is satisfied that the applicant is indeed a pre-existing issued and has a reasonable prospect in complying with the applicable regulatory requirements, the HKMA may grant a provisional license to the applicant.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
