The Hong Kong Monetary Authority set out the core features of a new licensing regime for fiat-referenced stablecoin (FRS) issuers following the Legislative Council’s passage of the Stablecoins Bill, which will become the Stablecoins Ordinance on implementation. Once in force, any person issuing an FRS in Hong Kong in the course of business, or issuing an FRS that purports to maintain a stable value with reference to Hong Kong dollars in or outside Hong Kong, will need to be licensed by the Monetary Authority. The regime requires licensed issuers to meet standards on reserve asset management and redemption, including segregation of client assets, a robust stabilisation mechanism, and meeting stablecoin holders’ redemption requests at par value on reasonable conditions. Additional obligations cover anti-money laundering and counter-terrorist financing, risk management, disclosure and auditing, and fitness and propriety. Investor-facing restrictions include limiting the offering of an FRS in Hong Kong to specified licensed institutions, and permitting retail offering only for an FRS issued by a licensed issuer; advertising is restricted so that, at all times including the six-month non-contravention period, only advertisements of licensed FRS issuance are allowed. The Ordinance is expected to take effect later in 2025 and will include transitional arrangements to support licence applications and related business adjustments. The Hong Kong Monetary Authority will consult further on detailed regulatory requirements in due course, while the Government indicated it will soon consult on virtual-asset over-the-counter and custodian services and issue a second policy statement on virtual-asset development.

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