Hong Kong’s stablecoin law goes into force, paving the way for next-gen financial systems | Opinion

On August 1, 2025, Hong Kong’s landmark Stablecoin Bill officially came into effect, establishing a licensing regime for entities conducting “regulated stablecoin activities.” These include the issuance of fiat-referenced stablecoins, management of reserve assets, and redemption operations. The bill is part of a broader strategy by the Hong Kong Monetary Authority to enhance regulatory oversight while positioning the city as a global hub for digital assets.

With Hong Kong’s new stablecoin law now in force, the stage is set for programmable money to play a central role in next-generation financial systems. Backed by maturing blockchain infrastructure, stablecoins are increasingly supporting automated and conditional payments through smart contracts, enabling use cases such as escrow, milestone-based disbursements, dynamic liquidity provisioning, and intelligent treasury operations. 

This evolution is powered by API-driven platforms that integrate seamlessly with enterprise systems like ERP and payment processors. Critically, compliance is embedded by design, with AML/KYC, sanctions screening, and fraud detection built into transaction workflows, ensuring regulatory alignment across jurisdictions and reinforcing Hong Kong’s vision of a secure, programmable digital financial future.

The Stablecoin Bill could not have come at a more opportune time. Stablecoins are emerging as a foundational layer for next-generation financial infrastructure, offering a programmable, real-time settlement network that complements traditional systems and opens new possibilities in payments, cross-border settlements, and corporate treasury management. Their defining advantages — instant (T+0) settlement, 24/7 availability, low-cost transactions, and on-chain transparency — make them particularly attractive for cross-border payments, supply chain logistics, and capital market activities. 

In fact, 2024’s global stablecoin volume of $27.6 trillion surpassed the combined volumes of Visa and Mastercard, a sign that their use case may be at a major tipping point for consumers and businesses.

Alongside payments, digital assets in Hong Kong are also undergoing significant diversification. The market is embracing the tokenization of not only investment products like digital asset ETFs but also physical assets. These initiatives are deepening market sophistication and aligning the financial system with the digitization of real-world assets.

Hong Kong’s LEAP forward 

Hong Kong’s latest policy update, known as the “Policy Statement 2.0 on the Development of Digital Assets in Hong Kong,” marks a more assertive and ambitious phase in its digital asset strategy. Building on its existing crypto regime, the update reinforces the city’s bid to become a leading global hub for digital finance through the LEAP framework, and again places stablecoins center stage, recognizing them as a critical layer in the infrastructure needed to advance web3 finance and support institutional adoption.

A key feature of Hong Kong’s approach is its emphasis on robust regulatory requirements. Licensed issuers must maintain a full reserve of highly liquid, high-quality assets. This requirement enhances the stability of stablecoin ecosystems and also builds public confidence for broader use in both local and international markets. Over-the-counter desks licensed in Hong Kong will play a vital role in sourcing and distributing stablecoin liquidity. 

Cross-border trade and settlement using stablecoins also stand to benefit immensely from this framework. Transactions that once took days can now be settled instantly with transparent and verifiable records. This significantly reduces operational friction, enabling new efficiencies in regional and international commerce.

Naturally, in conversations with industry participants, we’ve observed strong demand for entry into Hong Kong’s stablecoin regime. Christopher Hui, Secretary for Financial Services and the Treasury, has publicly stated that licenses will initially be limited to a “single digit” number of entities on top of those in the existing sandbox. This selective approach underscores the government’s focus on credibility, quality, and operational readiness in stablecoin issuance.

The regulatory ripple effect

As the first jurisdiction to implement comprehensive legislation governing stablecoin issuance, reserve management, redemption, and operational oversight, Hong Kong is poised to set a regulatory benchmark that other markets are likely to borrow best practices from.

To this end, the United States has already advanced the GENIUS Act, which passed the Senate in June and the House in July 2025. The Act introduces a dual-track framework: banks and their subsidiaries can issue stablecoins under Federal Reserve and FDIC oversight, while non-bank entities can obtain federal OCC or state licenses. It mandates 1:1 reserve backing in highly liquid U.S. dollar assets and aims to secure the US dollar’s position as the leading on-chain reserve currency.

While these jurisdictions share a commitment to reserve transparency and financial stability, they differ in focus and regulatory style. 

Outside of the United States, other markets are also advancing the growth of regulated digital assets. 

In the EU, the Markets in Crypto-Assets Regulation (MiCA) took effect on June 30, 2024, requiring issuers to maintain full reserves, publish whitepapers, and obtain authorization before issuance. Crypto-asset service providers, many of which deal with stablecoins, are also undergoing a transition period until July 1, 2026.  

In the UAE, VARA introduced its updated Virtual Asset Issuance Rulebook on May 19, 2025, creating a regulatory pathway for asset-referenced virtual assets and tokenized real-world assets.

Together, these developments signal that fiat-backed tokenization is moving beyond speculation and becoming core to modern financial infrastructure. As global frameworks continue to take shape, Hong Kong may serve as a model for jurisdictions that want to attract business and investment by balancing innovation with regulatory clarity.

The backbone of tomorrow’s financial system

The implementation of the Stablecoin Bill signals a shift from experimentation to infrastructure. As stablecoins become regulated, trusted, and interoperable, they are positioned to enable a new era of financial services, one where T+0, 24/7, and low-cost settlement on-chain become the gold standard.

To fully realize this potential, Hong Kong and other jurisdictions must continue building stablecoin ecosystems rooted in openness, compliance, and innovation. Regulation should not stifle technology, but guide it responsibly. Stablecoins serve as a bridge from early adopters to mainstream users and will likely be the first blockchain use case to reach mass adoption, driven by the universal need for more efficient cross-border payments.

Stablecoins will also ignite a broader transformation in capital markets. By anchoring real-world asset tokenization, they unlock liquidity, enhance transparency, and streamline financial infrastructure. Whether for trading, investing, or transacting, stablecoins are no longer just digital currencies — they are becoming the backbone of tomorrow’s financial system.

With legislative momentum building on both sides of the Pacific, the fusion of regulatory clarity and technological innovation is reshaping global finance. The question is no longer whether stablecoins will play a major role, but how quickly the rest of the world will catch up.

Anna Liu

Anna Liu is the CEO of HashKey Tokenisation. She joined HashKey Group in 2018, and previously she was a Senior Legal Counsel at Tencent.