May 22, 2025
By Joe Pan
HONG KONG — The passage of Hong Kong’s Stablecoin Bill on May 21 has sent ripples through the city’s crypto community, with stakeholders lauding the legislation as a leap forward for digital asset regulation and innovation. The new law, which establishes a comprehensive licensing regime for fiat-referenced stablecoin (FRS) issuers, is widely seen as a move that positions Hong Kong at the forefront of the global digital finance race. However, some warn that added regulation and compliance costs could pose significant challenges for operators, particularly small and medium-sized enterprises (SMEs).
What do the government officials say about the Bill?
“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,” said Secretary for Financial Services and the Treasury Christopher Hui. “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.”
Under the new rules, any entity issuing an FRS in Hong Kong—or referencing the Hong Kong dollar in or outside the territory—must obtain a license from the Hong Kong Monetary Authority (HKMA). Requirements include robust reserve management, segregation of client assets, a stabilization mechanism, and the ability to process redemptions at par value. Issuers must also comply with anti-money laundering, risk management, and audit mandates.
Chief Executive of the HKMA Eddie Yue said, “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 do the industry stakeholders and observers say about the Bill?
Views from a former Regulator and a legal Perspective
Angela Wong, former SFC regulator and QReg Senior Consultant (LinkedIn), commented, “The passage of the Stablecoin Bill completes a critical piece of Hong Kong’s regulatory jigsaw for virtual assets, especially for RWA tokenisation. As this regime takes effect and with more regulated stablecoins available, we can finally unlock Hong Kong’s unique potential as a tokenised economy hub, establishing the foundation for efficient, blockchain-native settlement that makes tokenisation truly meaningful.”
Andrew Fei, partner at King & Wood Mallesons (LinkedIn, firm LinkedIn), said, “Hong Kong’s new Stablecoins Ordinance is among the world’s most comprehensive laws for stablecoin issuance and distribution. The law has the potential to place Hong Kong at the forefront of global web3 regulation, aligning with standards set by the Financial Stability Board and the Basel Committee on Banking Supervision. It also reflects elements of the stablecoin regimes in other major jurisdictions, such as the United States, where a stablecoins bill is progressing through the legislative process.”
On the issue of money laundering, it’s a consensus that SFC and HKMA will need to work closely together to ensure that stablecoin issuers implement effective KYC and transaction monitoring, so that illicit activities are detected and deterred from the outset.
Views from Hopeful Issuers and Crypto Startups
Danny Lung, founder and hopeful stablecoin license holder at PQA Labs (LinkedIn), noted, “The new framework finally gives us clarity and a clear path to launch compliant products. This will attract more serious players and investment to Hong Kong’s digital asset sector. We now have the regulatory certainty needed to innovate and build for the future, and we’re eager to begin the licensing process.”
Alexander Feenie of Chavenette (LinkedIn) is initiating the process to license a dedicated financial services entity in Hong Kong. He applauded the new bill and said, “Regulatory clarity lets us scale faster and showcase our technology in a fully licensed environment. This allows us to operationalize our technology in-market, not just as a technology provider, but as a live use case. We believe this dual role strengthens both investor value and our ability to contribute to a sustainable, regulated digital finance ecosystem.”
Industry and Ecosystem Operators
Kevin Lee, Chief Business Officer at Gate (LinkedIn, company LinkedIn), said, “This reinforces Hong Kong’s role as a key jurisdiction in the global digital asset landscape. With the pace of industry innovation accelerating, it’s critical that regulatory development keeps pace. We encourage the Hong Kong government to build on this momentum by exploring initiatives such as regulatory passporting and cross-border harmonization.”
Emil Chan, Founding Chairman of Hong Kong Digital Fintech Association (LinkedIn), said, “With a legal framework in place, people won’t have to worry about whether
stablecoins like USDT are properly backed. The new law boosts confidence in Hong Kong’s stablecoin market, and with the government’s fast-track approach—plus Hong Kong’s low taxes and common law system—a lot of international transaction data could flow back to Hong Kong, reinforcing its role as a global financial hub. If the bill hadn’t passed, Hong Kong would be stuck with traditional trading methods and miss out on new opportunities, and the government wouldn’t be able to track data or predict market trends as effectively.”
Eddie Chou, CTO of Mmatrix (LinkedIn), a digital asset kiosk solution provider, applauds the Hong Kong government for its versatility and speed in drafting stablecoin regulation, noting the new bill “cover[s] the most popular stablecoins such as USDT and USDC…creating opportunities to expand our award-winning digital kiosk offerings to include a wider range of virtual assets for the public.”
Investor Perspective
Alan Li, blockchain investment director of a Hong Kong family office. (LinkedIn), observed, “Hong Kong’s stablecoin act is a step forward. The HKD is a start, but broader currency options and yield-bearing stablecoins should be next. Programmable money will drive innovation, making tools like digital vouchers more efficient and flexible. We welcome and look forward to projects coming out of the stablecoin sandbox. The act is a step forward, and there should be more positive changes in the future.”
Ray Wong, founder of Asymmetry Capital (LinkedIn) and an early crypto investor, added, “I believe that Hong Kong is setting a new standard in stablecoin regulations, even if it’s not the first major financial center to do so. Stablecoin is the gateway to the digital asset world, and this bill is a testament to Hong Kong’s pro-regulatory approach. The city’s move will attract more global players and help drive adoption among local investors.”
Comparing the US GENIUS Bill
Alan Li also compared the Hong Kong bill to the US’s proposed GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), which mandates 1:1 reserves, monthly audits, and federal oversight for large issuers. “The GENIUS Act could boost US Treasury demand and support DeFi adoption, but it favors traditional banks and limits direct user benefits. Hong Kong’s approach is more open to innovation, especially for smaller issuers and programmable money,” Li explained.
Concerns Over Compliance Costs and Regulations
Despite broad support, several industry participants have voiced concerns about the bill’s potential downsides, especially for smaller players.
Fabian Lischka, a quant analyst and cryptocurrency critic (LinkedIn), said any “fiat-referenced stablecoins ipso facto require a trusted intermediary that holds the underlying fiat in custody and issues the stablecoins upon receipt of fiat.”
“Thus, inefficient, permissionless decentralized blockchain technology is not required, and good old distributed technology would suffice, which is vastly more efficient and more amenable to regulation,” Lischka said.
Other small medium enterprise (SME) operators also want to be reassured that the regime doesn’t become a barrier to entry for startups and that oversight is balanced for innovation.
Chou, whose startup is also an SME, acknowledges, “The downside of this stablecoin bill can mean added compliance for SMEs, who will have additional administrative and operational costs.”
Alan Li offered a more tempered view as an investor, noting, “I’m not super bullish on either the US or the Hong Kong stablecoin bill. I agree that the systems favor big players, which is normal in Hong Kong’s [regulatory] environment. My comment is slightly positive—better than neutral.”
What’s Next for Regulation
With the Stablecoin Bill set to take effect later this year, all eyes are on how the SFC—ultimately responsible for enforcement, including anti-money laundering—will implement these new rules.
Duncan Chiu, Legco member and chairman of the bill committee, highlighted the legislative momentum: “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.
Angela Wong, as an ex-regulator who is keenly aware of the need to balance regulation and innovation, noted, “Achieving an optimal equilibrium between regulation and innovation has always been a formidable challenge—one not unique to Hong Kong, but shared by regulators worldwide. While established regulatory principles offer great reference value, regulators also need creative approaches to effectively manage the risks and, at the same time, seize the opportunities presented by these unprecedented business paradigms.”
Whether you love or loathe regulation, one thing is clear: in Hong Kong’s digital asset sector, more rules are coming—so buckle up, compliance teams.
Link to the full Hong Kong Stablecoin Bill
https://www.legco.gov.hk/yr2025/english/hc/papers/hc20250425cb1-806-e.pdf
Link to the US’s “Genius Bill”
https://www.congress.gov/bill/119th-congress/senate-bill/1582/text
About the Author
Joe Pan is a multi-disciplinary journalist, educator, and startup founder. Currently serving as an editor and producer at Blockwind News, he has covered major crypto conferences globally since 2019 and moderated Web3 events across Asia. Joe teaches Asia’s only accredited Master of Journalism class on “Covering Cryptocurrency and Blockchain” at Hong Kong Baptist University.
