Hong Kong's Financial Services and the Treasury Bureau welcomed the Legislative Council's passage of the Stablecoins Bill, which will introduce a licensing regime for fiat-referenced stablecoin (FRS) issuers and tighten controls on offering and marketing FRS in Hong Kong. Once the Stablecoins Ordinance is implemented, any person that issues an FRS in Hong Kong, or issues an FRS that purports to maintain a stable value with reference to the Hong Kong dollar in or outside Hong Kong, will need a licence from the Hong Kong Monetary Authority (MA). Licensed issuers will be required to meet standards on reserve asset management and redemption, including segregation of client assets, a robust stabilisation mechanism, and processing redemption requests at par value on reasonable conditions, as well as requirements on anti-money laundering and counter-terrorist financing, risk management, disclosure and auditing, and fitness and propriety. The regime also limits distribution and promotion, including rules that only specified licensed institutions may offer an FRS in Hong Kong, only an FRS issued by a licensed issuer may be offered to retail investors, and only advertisements of licensed FRS issuance are permitted at all times, including during a six-month non-contravention period. The Ordinance is expected to come into effect in 2025 and includes transitional arrangements to facilitate licence applications and related business changes. The MA will consult further on detailed regulatory requirements, and the Government indicated it will consult on virtual asset over-the-counter and custodian services and issue a second policy statement on virtual assets.

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