The new regulations for stablecoins in Hong Kong will soon take effect! The Monetary Authority has set a 6-month transition period and will rigorously review license applications.

The "Stablecoin Issuance Regulations" in Hong Kong will officially take effect on August 1, 2025. The Hong Kong Monetary Authority (HKMA) will simultaneously launch a 6-month transitional arrangement for stablecoin issuance, providing a compliance pathway for stablecoin projects already operating in Hong Kong. The new regulations require strict adherence, involving core regulatory focuses such as high liquidity reserves, rapid redemption, local entities, and capital requirements. The HKMA will issue temporary licenses, but companies must submit formal license applications within 90 days. This move aims to establish Hong Kong as a regulated center for encryption assets while safeguarding investor rights and financial stability.

A New Era of Regulation for Hong Kong Stablecoins Begins The Hong Kong Monetary Authority (HKMA) announced that with the "Stablecoin Issuance Ordinance" officially coming into effect on August 1, 2025, a six-month transitional arrangement will be introduced for stablecoin issuers already operating in Hong Kong. This key initiative is part of Hong Kong's strategy to solidify its position as a regulated digital asset center, while also strengthening oversight of enterprises that issue fiat-backed encryption currency.

Transitional Arrangements: Temporary License and Compliance Path The Monetary Authority stated that it will issue temporary licenses to applicants who can demonstrate a credible path to meet comprehensive regulatory compliance requirements. Enterprises seeking a stablecoin license in Hong Kong must submit a formal license application to the Monetary Authority within three months (90 days). Those who fail to submit on time will face the risk of a gradual termination of their business in Hong Kong within the following four months.

If the Monetary Authority determines during the review process that the applicant does not meet the requirements, it has the right to revoke or reject their temporary license. In this case, the issuer will be given a one-month notice period to orderly exit the Hong Kong encryption market.

Core Regulatory Requirements of the Stablecoin Issuance Regulations The newly implemented "Stablecoin Issuance Regulations" set strict conditions for stablecoin issuance licenses:

• High-Quality High-Liquidity Reserves: The value of the stablecoin must be fully supported by high-quality and high-liquidity reserve assets.
• Fast Redemption Guarantee: The issuer is obligated to fulfill users' stablecoin redemption requests within one business day.
• Local Entity and Capital Requirements: Qualifying enterprises must maintain a physical operation in Hong Kong, meet minimum capital requirements, and demonstrate that they have feasible application scenarios and a sustainable business model.
• KYC and AML/CFT measures: During the distribution and redemption process of stablecoins, issuers must perform customer due diligence (KYC) and verify wallet ownership or control. At the same time, automated trading monitoring tools must be deployed to monitor on-chain fund flows.
• High-risk wallet control: High-risk wallet addresses must be blacklisted and suspicious transaction activities reported to relevant regulatory authorities.

The penalties for violations are severe, and the regulatory authority of the Monetary Authority is clearly defined Issuers who violate licensing terms or regulatory provisions will face a series of severe penalties, including but not limited to hefty fines, public condemnation, suspension or revocation of licenses, and may even be referred to law enforcement for criminal prosecution. The Monetary Authority reserves the full power to investigate and penalize any non-compliant entities (regardless of whether they hold temporary or formal licenses) at any time.

Prudently Advance: Local Ambitions Recognized by the Market The "Stablecoin Issuance Regulations" were passed by the Hong Kong Legislative Council in May 2025. By requiring stablecoin issuers to demonstrate tangible economic utility and strong reserve support, the Monetary Authority aims to protect retail investors and financial infrastructure from market volatility and systemic risk shocks. Market observers point out that the regulator's phased implementation of a prudent strategy reflects its intention to attract high-quality participants truly committed to compliance operations.

License Distribution Rhythm and Market Dynamics It is expected that only a few applicants will successfully obtain the virtual asset license in Hong Kong during the initial stage, and comprehensive formal license approvals may begin in early 2026. The Monetary Authority encourages potential applicants to express their intentions and complete submissions by September 30, but has not disclosed the specific number of intention applications received so far.

Major financial and fintech giants have been actively preparing to enter the market. In June of this year, Ant International, a subsidiary of Alibaba's Ant Group, has clearly stated its plan to submit a license application. The clear regulatory framework provided by the Monetary Authority, especially as stablecoins increasingly integrate into payment systems and institutional finance, will bring significant long-term competitive advantages and development opportunities for stablecoins in Hong Kong for compliant operators.

Conclusion: The implementation of Hong Kong's "Stablecoin Issuance Ordinance" and the transitional arrangements mark a key step in building a globally leading regulated virtual asset hub. Although the strict regulatory framework raises the compliance threshold, it also provides clear rules and long-term development guarantees for stablecoin projects that are seriously planning in the Hong Kong market. In the next six months, which projects can successfully obtain temporary and formal licenses will become an important barometer for observing the effectiveness of Hong Kong's cryptocurrency policy and market attractiveness.