Key Takeaways
- Hong Kong’s stablecoin rules officially took effect on Aug. 1 after years of consultations.
- The regulations have already sparked a surge in activity, with flows up nearly 10X year-over-year.
- HashKey’s OTC head says clear rules are turning Hong Kong into a global liquidity hub.
After more than three years of drafting, consultations, and political back-and-forth, Hong Kong’s much-anticipated stablecoin regulations are now live.
The Stablecoins Ordinance (Cap. 656), passed by the Legislative Council on May 21, 2025, came into force on Aug. 1. It lays out strict requirements for licensing, reserves, and risk controls.
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The New Stablecoin Ordinance
The process began in January 2022, when the Hong Kong Monetary Authority (HKMA) first floated its discussion paper on crypto assets and stablecoins.
That was followed by a formal consultation in January 2023, then another round of talks with the Financial Services and Treasury Bureau between December 2023 and July 2024.
The bill was gazetted in December 2024 and finally signed into law this May.
The new rules target fiat-referenced stablecoins (FRS)—tokens pegged to one or more fiat currencies or other HKMA-approved units of value.
Here are the key licensing requirements:
- Corporate Structure – Licensees must be Hong Kong-incorporated or an authorized overseas bank.
- Local Presence – Issuers must have senior management based in Hong Kong, with “fit and proper” approval from the HKMA.
- Capital & Reserves – Minimum paid-up share capital of HK$25M (banks exempt) and fully matched reserve assets in the same currency as the stablecoin. HKD stablecoins can be backed by USD due to the peg.
- Redemption Rights – Holders must be able to redeem at par without unreasonable conditions.
- AML/CFT Compliance – Strict risk management, AML/KYC, and transaction monitoring. Enhanced due diligence is required for unhosted wallets over HK$8,000.
- Prohibitions – No interest payments on stablecoin holdings, though marketing incentives are allowed.
Liquidity Magnet: HashKey’s View From the Inside
To understand the real-world impact, CCN spoke with Emma Shi, Director of OTC and Institutional Sales at HashKey, one of Hong Kong’s most compliant crypto exchanges.
Shi says the combination of financial infrastructure and clear rules is making Hong Kong a magnet for liquidity:
“We have the best liquidity—not just for crypto trading, but also for equities, bonds, and commodities. Hong Kong has always been a liquidity hub, and now we’re becoming a Web3 hub too.”
On stablecoin flows, the growth has been dramatic:
“I run the OTC desk at HashKey. About 80% of our flows are on- and off-ramps for stablecoins. In bear markets, we see more off-ramps, but lately flows are balanced—and growing fast. Compared to Q1 2025, volumes are up 4X. Year-over-year for Q2, they’re up more than 10X.”
Hong Kong’s Next Chapter
With the regulations now in force, Hong Kong is positioning itself as Asia’s premier stablecoin hub. Institutional players have the legal clarity they need, and the surge in capital flows suggests global traders are taking notice.
If the early data is any sign, the city’s mix of deep liquidity, regulatory certainty, and global financial reach could make it a model for other jurisdictions trying to balance innovation with oversight.
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Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
