A Guide to Navigating Hong Kong's Stablecoin Regulations for Everyday Users

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The global virtual currency market has undergone significant transformation, shifting from rapid expansion to a more regulated environment. Stablecoins, which serve as a bridge between digital assets and the real economy, have attracted considerable attention due to their stability, compliance, and practical applications.

In 2025, Hong Kong introduced the world’s first comprehensive regulatory framework for stablecoins, known as the "Stablecoin Ordinance," set to take effect on August 1. This legislation integrates stablecoin issuance, circulation, and investment into a legal framework, enabling financial institutions and tech companies to offer stablecoin products under clear guidelines. It also provides ordinary individuals with a compliant, secure, and transparent way to invest in and use stablecoins.

This policy reinforces Hong Kong’s position as a global digital finance hub and creates new opportunities for investors, cross-border users, and asset managers.

Understanding Hong Kong’s Stablecoin Ordinance

Scope of the Ordinance

The regulations cover stablecoins pegged to fiat currencies—such as HKD, USD, and RMB—that are issued in Hong Kong. They also apply to overseas-issued stablecoins linked to the Hong Kong dollar or promoted to the Hong Kong public. Any activity involving the Hong Kong market or HKD-pegged assets requires a license to prevent regulatory arbitrage.

Key Regulatory Requirements

The regulatory framework is built on three pillars:

  1. Issuance Access: Non-bank institutions must maintain a paid-up capital of HKD 25 million (banks are exempt). Reserve assets must consist entirely of high-liquidity instruments like cash or short-term government bonds. Key personnel, including the CEO and CFO, must be based in Hong Kong.
  2. Technical Security: Smart contracts must undergo monthly audits by the Hong Kong Monetary Authority (HKMA). Reserve fund addresses must be monitored in real-time using on-chain oracles.
  3. Application Boundaries: Stablecoins cannot pay interest to avoid resembling deposit products. Cross-border promotion is restricted; actively targeting the Hong Kong public requires a license.

Sandbox Mechanism

The HKMA has established a regulatory sandbox, allowing select institutions to test stablecoin issuance and applications. This helps accumulate practical experience and mitigate market risks.

Current sandbox participants include:

Note: Participation in the sandbox does not guarantee a license. Full licensing will occur only after the formal implementation of the ordinance.

Investment Opportunities in the Stablecoin Ecosystem

Equity Perspectives

Several companies involved in the sandbox are positioned to benefit from the new regulatory environment:

Practical Applications: Cross-Border Payments and RWA

Revolutionizing Cross-Border Payments

Stablecoins are transforming cross-border transactions by enabling instant settlements and significantly reducing costs. Traditional methods, such as the SWIFT system, can take 2–4 days and charge fees of 1–3% per transaction. In contrast, stablecoins like JD-HKD can process transfers in seconds and reduce costs by approximately 90%.

Key application scenarios include:

JD’s founder has emphasized plans to expand stablecoin use to consumer payments, enabling global transactions without traditional intermediaries.

Real-World Asset Tokenization (RWA)

Stablecoins are also being used to tokenize real-world assets. For example, Ant Digital’s blockchain platform has piloted the tokenization of HKD 320 million in revenue rights from新能源 charging piles. Investors can purchase yield-bearing stablecoins pegged to U.S. Treasury bonds through licensed exchanges, with annualized returns of around 4.2%.

Compliance is critical: mainland residents can use their annual personal foreign exchange quota of USD 50,000 for conversions. Avoid underground banks or gray market channels to ensure legality.

Identifying and Avoiding Risks

Despite regulatory advances, risks remain in the stablecoin market. Key pitfalls to avoid:

  1. Unlicensed stablecoin projects misrepresenting their offerings.
  2. Overseas products promoted in Hong Kong without HKMA approval.
  3. Non-compliant fund flows bypassing formal financial channels.
  4. Unregistered payment channels offering suspiciously low rates.
  5. Platforms promising high yields—stablecoins in Hong Kong cannot pay interest.
  6. Using mainland bank cards for virtual currency transactions, which may trigger anti-money laundering controls.

Future Trends and Strategic Considerations

Policy and Market Outlook

The first batch of licenses is expected to be limited to a few leading institutions. Tracking the progress of major players like JD, Ant, and Standard Chartered is advisable for those looking to participate.

Hong Kong’s stablecoin ecosystem is evolving toward a multi-currency matrix, including HKD, USD, and offshore RMB. Applications in cross-border payments, supply chain finance, and the digital economy will further solidify Hong Kong’s role as a global financial hub.

The internationalization of the RMB reduces foreign exchange risks, benefiting cross-border trade and asset allocation. Stablecoins’ "payment equals settlement" feature could reshape global capital flows, while judicial compliance models improve transparency and governance.

However, the market is still nascent. Participants should proceed cautiously, assessing policy risks and market maturity.

Steps for Everyday Users to Participate Compliantly

  1. Stay Informed: Follow updates on the Stablecoin Ordinance and the first license approvals after August 1.
  2. Prepare Accounts: Open a Hong Kong bank account and an account with a licensed exchange, completing KYC verification.
  3. Start Small: Begin with small investments or payments to familiarize yourself with the ecosystem.

Always use compliant channels, verify platform qualifications, and adhere to KYC and anti-money laundering rules. Avoid unlicensed products and high-risk investments.

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Frequently Asked Questions

What are stablecoins?
Stablecoins are digital assets pegged to stable reserves like fiat currencies or commodities. They combine the benefits of cryptocurrencies with the stability of traditional assets, making them suitable for payments and savings.

How does Hong Kong’s Stablecoin Ordinance affect international users?
The ordinance applies to any stablecoin activity involving the Hong Kong market or HKD pegging. International users must ensure compliance if operating in or targeting Hong Kong.

Can individuals earn interest on stablecoins in Hong Kong?
No. The ordinance prohibits interest payments on stablecoins to prevent them from being classified as deposit-like products.

What is the sandbox mechanism?
The regulatory sandbox allows institutions to test stablecoin applications under supervision. Participation does not guarantee a license but helps refine compliance and security.

Are there risks in using stablecoins for cross-border payments?
While stablecoins offer efficiency, users must avoid unlicensed platforms and ensure transactions comply with local regulations to mitigate risks.

How can I verify if a stablecoin is licensed in Hong Kong?
Check the official HKMA website for a list of licensed issuers and platforms. Always use compliant, registered services for transactions.

Conclusion

Hong Kong’s Stablecoin Ordinance marks a significant step toward institutionalizing and transparently regulating virtual assets. It offers a secure pathway for everyday users to engage in stablecoin investment, payment, and asset allocation. With robust policy support and technological innovation, stablecoins are poised to become a foundational component of the financial ecosystem.

By understanding the rules and prioritizing compliance, individuals can safely leverage the opportunities presented by this evolving market.