From Sandbox to Regulation: Opportunities and Challenges for Hong Kong Stablecoins

On May 30, 2025, Hong Kong's "Stablecoin Ordinance" officially became law and is expected to take effect within this year. This marks Hong Kong's incorporation of stablecoins into its financial regulatory framework, making it the first jurisdiction in the world to establish a comprehensive regulatory framework for fiat-collateralized stablecoins.

The stablecoin defined by the regulations refers to tokens that are anchored to fiat currency. After implementation, three types of activities related to stablecoins need to obtain licenses: issuing stablecoins in Hong Kong, issuing stablecoins pegged to the Hong Kong dollar anywhere, and actively promoting the issuance of stablecoins to the public in Hong Kong.

The issuer of the stablecoin must apply for a license from the Hong Kong Monetary Authority, with a minimum registered capital of 25 million HKD. License holders must meet four requirements: maintain a sound reserve mechanism, allow holders to redeem at par, comply with anti-money laundering requirements, and trade on licensed platforms.

In addition to legislation, the Hong Kong Monetary Authority has also launched a stablecoin issuer sandbox program. The three groups of participants announced in July 2024 include JD Coinchain Technology, Yuan Coin Innovation Technology, and a group formed by Standard Chartered Hong Kong, ANX Group, and Hong Kong Telecommunications. These institutions are testing their respective stablecoin operational plans.

Hong Kong has multiple considerations for promoting the development of stablecoins. First, as the scale of the cryptocurrency market expands, moderate regulation is more effective than complete prohibition. Second, the advancement of the U.S. "GENIUS Act" puts pressure on Hong Kong, prompting it to accelerate its legislative process.

However, regulation also brings challenges. Excessively high compliance costs may affect the competitiveness of enterprises, requiring a balance in the level of regulation. In addition, in the face of the dominance of the US dollar stablecoin, the development prospects of the HKD stablecoin still have uncertainties.

To promote the development of the Hong Kong dollar stablecoin, Hong Kong is planning a strategy for the tokenization of real-world assets ( RWA ). By tokenizing high-quality assets, trading scenarios can be created for the Hong Kong dollar stablecoin. Currently, there are three successful cases of domestic assets issuing RWA in Hong Kong.

In the future, Hong Kong needs to simultaneously develop stablecoins and RWA to attract quality assets and establish an open crypto market based on the real economy. At the same time, regulatory authorities should balance the compliance pressure on enterprises with the competitive market environment, effectively supporting the development of crypto assets in Hong Kong.