Hong Kong Tightens Grip: Stablecoin Licenses Capped in 2025 Regulatory Crackdown

Hong Kong slams the brakes on stablecoin free-for-all—regulators drop the hammer with strict licensing limits starting 2025.

No more ‘Wild West’ for crypto-pegged assets as the Financial Services Authority (FSA) plays gatekeeper. Only the strongest projects survive the cut.

Market tremors expected as speculators scramble—because nothing says ‘financial innovation’ like good old-fashioned scarcity tactics.

Hong Kong eyes regional dominance as stablecoin race heats up

Initially, Hong Kong’s regulatory sandbox and licensing plans targeted Hong Kong dollar-pegged stablecoins. However, there is growing industry interest in offshore yuan-pegged alternatives.

Chinese tech giants JD.com and ANT Group are reportedly lobbying China’s central bank to greenlight such offerings, intensifying the regional stablecoin race.

Hui emphasized that any stablecoin involving foreign currencies WOULD require close coordination with relevant jurisdictions. While the current framework allows stablecoins backed by legal tender, regulators must weigh exchange rate impacts and systemic risks when foreign currencies are involved.

The regulatory activity in Hong Kong is emerging as the popularity of stablecoins soars worldwide. In the US, a landmark regulatory bill to regulate stablecoins, the GENIUS Act, passed the Senate and is waiting for House review. President Donald TRUMP has feverishly backed rapid passage.

At the same time, China’s central bank governor, Pan Gongsheng, recognized that stablecoins and CBDCs have increasingly influenced global payment systems.

Although things haven’t been that great for crypto in mainland China (where cryptocurrency trading and mining have been banned for some time now), Hong Kong has been making a name for itself as a crypto haven. 

Last year, the Hong Kong Monetary Authority (HKMA) opened a stablecoin sandbox, drawing key industry participants such as Standard Chartered, Animoca Brands, Hong Kong Telecommunications (HKT), JD Coinlink, and RD InnoTech.

The city’s decision to license stablecoins shows its ambition to be a central figure in the future of digital payments across Asia and beyond.

Hong Kong sets global standard with new stablecoin licensing law

Just a few weeks ago, Hong Kong passed a new stablecoin bill, expanding its cryptocurrency licensing framework as global regulators increasingly MOVE to oversee digital assets.

Unlike highly volatile cryptocurrencies such as Bitcoin, stablecoins are digital assets pegged to real-world assets like fiat currencies or commodities, including gold. The new legislation targets fiat-referenced stablecoins and introduces a licensing mandate for issuers under the Hong Kong Monetary Authority.

Under the new law, stablecoin issuers must meet a series of requirements, including maintaining full asset reserves and segregating client assets. The HKMA said the framework is designed to “enhance Hong Kong’s existing regulatory framework on virtual-asset (VA) activities, thereby fostering financial stability and encouraging financial innovation.” The authority added that further consultations would be held to finalize regulatory details.

The government confirmed that the stablecoin regime is expected to take effect later this year, with a transitional period to help industry participants adapt.

This legislation builds on Hong Kong’s 2023 rollout of a broader VIRTUAL asset licensing regime, which applies to crypto firms offering services to retail investors. Until recently, stablecoins were not covered under that framework.

YeFeng Gong, Risk and Strategy Director at HashKey OTC, the trading division of licensed crypto platform HashKey Group, noted that Hong Kong’s new stablecoin policy sets a global benchmark by mandating full reserve backing, strict redemption guarantees, and HKMA oversight.

He added that the policy provides institutional-level assurance for traders and strengthens Hong Kong’s position as a frontrunner in regulated digital finance.

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