Hong Kong Unleashes Stablecoin Law: The Catalyst for Next-Gen Finance You Can’t Ignore
Hong Kong just flipped the switch on its stablecoin legislation—and traditional finance won't know what hit it.
Why this matters
The city's new regulatory framework doesn't just legitimize stablecoins—it hands crypto-native institutions the keys to rebuild payment rails from scratch. No more begging legacy banks for permission to innovate.
The fine print
Expect licensed issuers to roll out HKD-pegged tokens within months. The law mandates 1:1 reserves (take notes, Tether) with quarterly audits—because apparently 2008 taught us nothing about trust-based systems.
Wall Street's worst nightmare
This isn't about catching up to Singapore or Tokyo. Hong Kong's playbook skips the 'ask forgiveness' phase entirely—regulators are actively clearing the runway for algorithmic stablecoins and CBDC interoperability trials.
One cynical footnote
Funny how these 'groundbreaking' financial reforms always emerge when a global banking crisis leaves everyone scrambling for plan B. Coincidence? Probably not.
Hong Kong’s LEAP forward
Hong Kong’s latest policy update, known as the “Policy Statement 2.0 on the Development of Digital Assets in Hong Kong,” marks a more assertive and ambitious phase in its digital asset strategy. Building on its existing crypto regime, the update reinforces the city’s bid to become a leading global hub for digital finance through the LEAP framework, and again places stablecoins center stage, recognizing them as a critical layer in the infrastructure needed to advance web3 finance and support institutional adoption.
A key feature of Hong Kong’s approach is its emphasis on robust regulatory requirements. Licensed issuers must maintain a full reserve of highly liquid, high-quality assets. This requirement enhances the stability of stablecoin ecosystems and also builds public confidence for broader use in both local and international markets. Over-the-counter desks licensed in Hong Kong will play a vital role in sourcing and distributing stablecoin liquidity.
Cross-border trade and settlement using stablecoins also stand to benefit immensely from this framework. Transactions that once took days can now be settled instantly with transparent and verifiable records. This significantly reduces operational friction, enabling new efficiencies in regional and international commerce.
Naturally, in conversations with industry participants, we’ve observed strong demand for entry into Hong Kong’s stablecoin regime. Christopher Hui, Secretary for Financial Services and the Treasury, has publicly stated that licenses will initially be limited to a “single digit” number of entities on top of those in the existing sandbox. This selective approach underscores the government’s focus on credibility, quality, and operational readiness in stablecoin issuance.
The regulatory ripple effect
As the first jurisdiction to implement comprehensive legislation governing stablecoin issuance, reserve management, redemption, and operational oversight, Hong Kong is poised to set a regulatory benchmark that other markets are likely to borrow best practices from.
To this end, the United States has already advanced the GENIUS Act, which passed the Senate in June and the House in July 2025. The Act introduces a dual-track framework: banks and their subsidiaries can issue stablecoins under Federal Reserve and FDIC oversight, while non-bank entities can obtain federal OCC or state licenses. It mandates 1:1 reserve backing in highly liquid U.S. dollar assets and aims to secure the US dollar’s position as the leading on-chain reserve currency.
While these jurisdictions share a commitment to reserve transparency and financial stability, they differ in focus and regulatory style.
| Hong Kong Stablecoin Framework | US GENIUS Act | |
| Reserve requirements | Fully backed by highly liquid assets | Backed at least 1:1 with USD using highly liquid assets |
| Strategic goal | Maintain local financial stability and attract Web3 innovation | Defend dollar dominance, support tokenized government financing |
| Regulatory style | Single regulator: HKMA | Dual-track: Fed/FDIC for banks, OCC or states for non-banks |
Outside of the United States, other markets are also advancing the growth of regulated digital assets.
In the EU, the Markets in Crypto-Assets Regulation (MiCA) took effect on June 30, 2024, requiring issuers to maintain full reserves, publish whitepapers, and obtain authorization before issuance. Crypto-asset service providers, many of which deal with stablecoins, are also undergoing a transition period until July 1, 2026.
In the UAE, VARA introduced its updated VIRTUAL Asset Issuance Rulebook on May 19, 2025, creating a regulatory pathway for asset-referenced virtual assets and tokenized real-world assets.
Together, these developments signal that fiat-backed tokenization is moving beyond speculation and becoming Core to modern financial infrastructure. As global frameworks continue to take shape, Hong Kong may serve as a model for jurisdictions that want to attract business and investment by balancing innovation with regulatory clarity.
The backbone of tomorrow’s financial system
The implementation of the Stablecoin Bill signals a shift from experimentation to infrastructure. As stablecoins become regulated, trusted, and interoperable, they are positioned to enable a new era of financial services, one where T+0, 24/7, and low-cost settlement on-chain become the Gold standard.
To fully realize this potential, Hong Kong and other jurisdictions must continue building stablecoin ecosystems rooted in openness, compliance, and innovation. Regulation should not stifle technology, but guide it responsibly. Stablecoins serve as a bridge from early adopters to mainstream users and will likely be the first blockchain use case to reach mass adoption, driven by the universal need for more efficient cross-border payments.
Stablecoins will also ignite a broader transformation in capital markets. By anchoring real-world asset tokenization, they unlock liquidity, enhance transparency, and streamline financial infrastructure. Whether for trading, investing, or transacting, stablecoins are no longer just digital currencies — they are becoming the backbone of tomorrow’s financial system.
With legislative momentum building on both sides of the Pacific, the fusion of regulatory clarity and technological innovation is reshaping global finance. The question is no longer whether stablecoins will play a major role, but how quickly the rest of the world will catch up.
Anna Liu is the CEO of HashKey Tokenisation. She joined HashKey Group in 2018, and previously she was a Senior Legal Counsel at Tencent.
