As of August 1, 2025, Hong Kong’s Stablecoin Ordinance is formally in pressure, establishing one of many world’s most rigorous regulatory frameworks for fiat-backed stablecoins.
Beneath the legislation, any entity providing stablecoins to retail customers in Hong Kong should acquire a license from the Hong Kong Financial Authority (HKMA). The primary spherical of license functions is open, with submissions due by September 30, and preliminary approvals anticipated in early 2026.
The ordinance introduces excessive compliance thresholds. Issuers should meet a minimal capital requirement of HKD 25 million and guarantee full 1:1 reserve backing with high-quality liquid property held in segregated custody. Redemption of stablecoins at par worth have to be processed inside one enterprise day. Nevertheless, probably the most controversial provision is the obligatory real-name id verification for all customers, with a minimal five-year file retention requirement.
Stablecoins beneath this regime can not combine with DeFi protocols or work together with nameless wallets, which successfully cuts them off from the broader decentralized finance ecosystem. Advertising and marketing unlicensed stablecoins is prohibited and will result in felony prices.
Business voices have raised issues that the regulation, whereas providing robust shopper safety, might stifle innovation by prohibiting permissionless entry and undermining core DeFi rules. HKMA Deputy Govt Director Chan King-hung acknowledged the principles exceed earlier anti-money laundering proposals however hinted that the framework could soften over time as compliance applied sciences evolve.
The legislation additionally stands in stark distinction to the U.S. SEC’s just lately introduced “Undertaking Crypto,” which helps innovation exemptions. Whereas Hong Kong prioritizes management and regulatory readability, critics argue that its high-barrier method might restrict the scalability and openness that make stablecoins helpful in Web3 finance.
