May 21, 2025
By Joe Pan
HONG KONG — Hong Kong’s Legislative Council (Legco) on May 21 passed the landmark Stablecoin Bill at its second reading, marking a pivotal step in the city’s ambition to become a global hub for digital assets and financial innovation.
The bill, officially published in the Gazette on December 6, 2024, and introduced for its first reading on December 18, 2024, establishes a comprehensive licensing and regulatory framework for stablecoin issuers. It aims to foster financial stability, enhance investor protection, and ensure Hong Kong’s competitiveness as an international financial center.
Bill Committee’s Fast-Track Approach
Duncan Chiu, Legco member and chairman of the bill committee that shepherded the legislation through a panel of 15 members, highlighted the bill’s swift progress. “I think the most interesting part is, when we were having the debate and discussions at the panel, the U.S. was actually also progressing with their own ‘Genius Bill’ on stablecoin legislation. We followed closely what the U.S. was discussing. That’s why we had the bill committee meetings, so we did wrap up very fast in terms of such a comprehensive bill,” Chiu said.
The bill saw minimal revision between its first and second readings, following a consultation period that began in December 2024 and concluded in early March 2025. Lawmakers and regulators worked closely with industry stakeholders to ensure the legislation was both comprehensive and practical, aligning with international standards while addressing local market needs.
With the Stablecoin Bill expected to come into force later this year, industry participants now have a clear regulatory roadmap. The HKMA will conduct further consultations on detailed requirements, and transitional arrangements will help existing and aspiring issuers adapt to the new regime.
“This is an important bill—we have a few more bills coming, bills that will address things like VA Custodian and VAOTC (Virtual Asset Custodian and Virtual Asset Over-the-Counter services),” Chiu further explains, after receiving congratulations from industry watchers.
Secretary for Financial Services and the Treasury Christopher Hui welcomed the passage, saying, “The Ordinance adheres to the ‘same activity, same risks, same regulation’ principle, with a focus on a risk-based approach to promote a robust regulatory environment. This is not only in line with international regulatory requirements, but also lays a solid foundation for Hong Kong’s virtual asset market, which, in turn, promotes the sustainable development of the industry, protects users’ rights and interests, and strengthens Hong Kong’s status as an international financial centre.”
Chief Executive of the Hong Kong Monetary Authority (HKMA) Eddie Yue echoed the sentiment, noting, “The Ordinance has established a risk-based, pragmatic, and flexible regulatory regime. We believe that a robust and fit-for-purpose regulatory environment would provide favourable conditions to support the healthy, responsible, and sustainable development of Hong Kong’s stablecoin and the broader digital asset ecosystem.”
What the Stablecoin Bill Allows Potential Issuers
The new law introduces a clear pathway for stablecoin issuers and related service providers. Here’s what the bill enables:
Key Provisions for Stablecoin Issuers:
- Licensing Requirement: Any entity wishing to issue a fiat-referenced stablecoin (FRS) in Hong Kong, or referencing the Hong Kong dollar, must obtain a license from the HKMA.
- Eligibility: Both Hong Kong-incorporated companies and authorized institutions (such as overseas banks) can apply for a license.
- Activity Scope: The bill covers entities issuing stablecoins in Hong Kong, those issuing stablecoins referencing the Hong Kong dollar outside the city, and other activities designated by the HKMA.
- Operational Duties: Licensees must meet minimum criteria for redemption, reserve asset management, and audit requirements.
- Governance: Appointment of key personnel—controllers, chief executives, directors, and stablecoin managers—requires prior HKMA consent.
- Offering Restrictions: Only licensed entities or permitted offerors may offer stablecoins to the public, subject to further conditions.
- Enforcement: The HKMA is empowered to investigate, enforce compliance, and, if necessary, appoint statutory managers to oversee troubled licensees.
- Sanctions: Unlicensed stablecoin activity carries hefty penalties, including fines up to HK$5 million and imprisonment for up to seven years.
About the Author
Joe Pan is an editor and producer at Blockwind News and an early adopter of blockchain technology. He has covered major crypto conferences globally since 2019 and moderated Web3 events across Asia. Joe is part of the founding team of Blockwind News and teaches Asia’s only accredited Master of Journalism class on “Covering Cryptocurrency and Blockchain” at Hong Kong Baptist University.
