June 05, 2025
By Anjali Kochhar
Hong Kong’s newly enacted stablecoin regulation is drawing considerable interest from mainland Chinese financial institutions, positioning the city as a burgeoning hub for tokenized finance. The stablecoin legislation, passed in May 2025, mandates that any issuer of fiat-referenced stablecoins especially those backed by the Hong Kong dollar must be licensed by the Hong Kong Monetary Authority (HKMA). This licensing regime emphasises strong governance, reserve backing, and risk management practices, marking a significant step toward building trust in digital currencies.
Citic Securities, one of China’s leading investment banks, has responded enthusiastically to the regulatory clarity. The firm anticipates that the law will accelerate the tokenisation of real-world assets (RWA) such as bonds, real estate, and commodities by mainland entities through Hong Kong. With a stable regulatory foundation, tokenisation projects can now progress with more confidence, supported by stablecoins as a reliable medium of exchange and settlement.
To further encourage development in the sector, the HKMA has launched a regulatory sandbox for select stablecoin issuers. This initiative allows companies to test applications in areas such as e-commerce payments, cross-border trade settlement, and tokenized asset trading. One high-profile participant is a consortium involving Standard Chartered, Animoca Brands, and Hong Kong Telecommunications, highlighting the increasing collaboration between traditional finance and blockchain innovators.
In parallel, Hong Kong continues to roll out broader digital asset initiatives. These include Project Ensemble, which explores the infrastructure for tokenized deposits and integration with central bank digital currencies (CBDCs). The city has also pioneered the issuance of tokenized green bonds and digital bonds from major Chinese banks, reinforcing its reputation as a leader in digital financial products.
The stablecoin licensing framework requires issuers to be incorporated locally and maintain a minimum paid-up capital, ensuring accountability and alignment with Hong Kong’s regulatory objectives. While the regime is strict, it strikes a balance between innovation and investor protection, serving as a model for other financial centers.
With growing mainland involvement and an expanding range of digital finance initiatives, Hong Kong is well-positioned to become a global leader in tokenized finance. The new stablecoin law not only strengthens financial stability but also opens the door to transformative advancements in how assets are issued, traded, and settled in the digital era.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
