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Hong Kong Passes Stablecoin Bill, Paving Way for Licensing Regime by Year-End

The stablecoin law could give Hong Kong a platform to test how regulatory frameworks can shape adoption, competition, and capital formation in tokenized finance.

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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Last updated:

May 21, 2025

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Key Takeaways:

The new legal framework gives Hong Kong a first-mover advantage in Asia’s race to regulate fiat-backed stablecoins under a unified licensing model.
The effort arrives amid global hesitation, with major economies still weighing how to incorporate stablecoins into existing financial rules.
Licensing clarity could attract both crypto-native firms and traditional financial institutions seeking structured entry into digital asset issuance.

The Legislative Council of Hong Kong has passed the Stablecoin Bill in its third reading on Wednesday, setting the stage for regulated stablecoin issuance in the city.

今天是全球Web3發展的里程碑，也是香港成為國際Web3中心的重要一步。很榮幸和大家分享今天香港特別行政區立法會已經t三讀通過<穩定幣條例草案>，相信在今年底前各大機構可以在香港向金融管理局申請成為合規穩定幣發行商。香港穩定幣是以法定貨幣為底層資產，我們歡迎全球有意發行穩定幣的企業和機構來… pic.twitter.com/0djeHqSOMX
— Johnny Ng 吴杰庄 (@Johnny_nkc) May 21, 2025

According to a May 19 post from the Hong Kong Legislative Council and National Committee of the Chinese People’s Political Consultative Conference member Johnny Ng, institutions will be able to apply for licenses with the Hong Kong Monetary Authority (HKMA) before the end of 2024.

Legislation Opens Licensing Path for Fiat-Backed Stablecoins

The law requires stablecoins to be backed by fiat currency and lays the groundwork for a licensing framework intended to attract global issuers.

Ng described the bill’s passage as “a milestone in the global development of Web3” and said Hong Kong is now positioned to act as a regional hub for regulated digital asset issuance.

“Hong Kong’s stablecoins are backed by fiat currency as underlying assets, and we welcome global enterprises and institutions interested in issuing stablecoins to apply in Hong Kong,” said Ng.

“The passage of this legislation is just the first step in building Web3 infrastructure,” Ng wrote. He called for industry-wide efforts to develop stablecoin use cases, citing physical retail, cross-border trade, and peer-to-peer payments as potential areas for application.

Ng also proposed allowing interest generated from stablecoin reserves to be distributed to holders, saying such incentives could increase participation and competitiveness in the market.

He invited institutions interested in stablecoin issuance to contact him directly and said he would help connect applicants with relevant stakeholders.

Hong Kong Separates Itself With Clear Regulation

The HKMA is expected to release additional licensing guidelines in the coming months. The city’s effort to create a compliant stablecoin framework comes amid increased scrutiny of fiat-backed digital assets in other jurisdictions, including the U.S., U.K., and Singapore.

Hong Kong’s framework offers stablecoin issuers a defined path to compliance, setting it apart from jurisdictions where regulatory approaches are still unclear. It also indicates a shift toward treating fiat-backed digital assets as part of mainstream financial infrastructure.

The handling of interest payments to holders may test how closely stablecoins can resemble traditional savings products. How authorities respond could shape not just market behavior but also the regulatory tone across Asia.

Frequently Asked Questions (FAQs)

How could this affect traditional financial institutions?

Banks and payment firms may now explore stablecoin issuance under a clear regulatory umbrella, allowing them to compete with crypto-native issuers on more equal footing.

Why is interest distribution a policy stress point?

Allowing stablecoins to pay interest blurs the line between tokenized money and deposit-like instruments, raising new regulatory and monetary policy considerations.

Could this framework influence offshore stablecoin markets?

Yes. Issuers targeting Asian users may begin routing activity through Hong Kong, prompting other jurisdictions to accelerate their own licensing efforts.