Hong Kong: Licensing regime for stablecoin issuers goes live on 1 August 2025

A. Licensing regime

From 1 August 2025, any person carrying on, or holds himself as carrying on a regulated stablecoin activity requires to be licensed by the Hong Kong Monetary Authority (HKMA) under the Stablecoins Ordinance, Cap. 656 Laws of Hong Kong (“SO”).

B. What is a stablecoin?

The SO defines “stablecoin” as a cryptographically secured digital representation of value that:

• Is expressed as a unit of account or store of economic value
• Is used or intended to be used as a medium of exchange accepted by the public for payment for goods or services, discharge of debt and/or investment
• Can be transferred, stored or traded electronically
• Is operated on a distributed ledger or similar information repository
• Purports to maintain a stable value with reference to a single asset or a basket of assets.

 C. Who and what activities are regulated by the SO?

At present¹1, the regulatory regime applies to any person:

• Who, in the course of its business, issues fiat-referenced stablecoins (“FRS”) in Hong Kong, or issues an FRS which purports to maintain a stable value with reference to the Hong Kong dollar in or outside of Hong Kong
• Who holds itself as carrying on the above business – this will include a case where the person actively markets, within or outside Hong Kong, to the Hong Kong public that it carries on the above business
• Who offers FRS or presents itself as offering FRS

D. Who and what activities are not regulated by the SO?

The SO focuses on regulating commercial businesses. Hence, the issuance of digital representation of value by central banks or governments are expressly excluded from the SO regulatory regime.

Further, to avoid overlapping of regulatory efforts, the SO expressly excludes digital assets that are already exempted from, or subject to, another regulatory regime in Hong Kong. These include “limited purpose digital tokens” such as customer loyalty point, in-game asset, etc.) exempted pursuant to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap. 615 (AMLO); “deposit” regulated by the Banking Ordinance, Cap. 155 (BO); “securities” or “futures contracts” regulated by the Securities and Futures Ordinance, Cap. 571 (SFO); or “float” or “SVF deposit” regulated by the Payment Systems and Stored Value Facilities Ordinance, Cap. 584 (PSSVFO).

Insofar as offering of FRS is concerned, certain licensed entities are permitted offerors subject to meeting prescribed conditions in the SO. These licensed entities include an entity licensed to provide virtual asset service under the AMLO, an entity licensed to issue SVF under the PSSVFO, an entity licensed for Type 1 regulated activity under the SFO, or an authorized institution under the BO.

E. Minimum criteria²2

The minimum eligibility and approval criteria are:

• Local corporation: Must be a Hong Kong incorporated company or an authorized institution under the BO incorporated outside of Hong Kong
• Principal business: Must have dedicated and sufficient resources to carry on its licensed stablecoin activities and must obtain the HKMA’s consent before it carries on any other business activities
• Purpose and sound and viable business: Must have in place a business plan that is realistic, concrete and viable, and has a reasonable prospect of generating sufficient demand for the stablecoins issued to ensure sustainability of business
• Non-interest bearing: Must not pay interest or interest-like incentive in any form to stablecoin holders, including profit, income or other return. Issuer must ensure that any income or loss arising from the management of reserve assets is attributed to the issuer
• Financial resources: Minimum paid-up share capital of HK$25 million; and liquid assets to meet its obligations as they fall due
• Reserve assets management: Full backing by reserve assets of high quality and high liquidity, with minimal investment risks³3, held under an effective trust arrangement with a licensed bank or other qualified custodian acceptable to the HKMA. Reserve assets must be held in the same referenced asset as that referenced by the FRS, with flexibility allowed on a case-by-case basis subject to prior written approval by the HKMA
• Redemption right: Must provide holders with the right to redeem at par value, without charging an unreasonable fee or attaching any unduly burdensome condition. Unless otherwise approved by the HKMA, valid redemption requests should be processed within one business day after received by the issuer
• Fit and proper, knowledge and experience: Fit and proper and competence requirements apply to shareholder controllers, directors, chief executive and stablecoin managers of the issuer. Generally, the HKMA expects that the senior management and key personnel of the issuer should be based in Hong Kong
• AML/CFT measures: Adequate and appropriate systems of control must be in place and implemented to prevent and combat possible money laundering or terrorist financing in connection with the stablecoin activities, in compliance with the AMLO and the HKMA guidelines
• Prudential and risk management: Adequate and appropriate risk management policies and procedures must be in place and implemented to manage the risks arising from stablecoin activities. These policies and procedures must be commensurate with the scale and complexity of those activities and cover risk governance, risk management framework and internal control system; credit, liquidity and market risk management; technology risk, operational risk, reputation risk management; and incident management, business continuity and exit management
• Disclosures: The publication of a white paper to provide comprehensive and transparent information about the type of specified stablecoins issued, and to provide ongoing transparency through regular disclosures of the reserve assets and independent attestation results
• Complaint handling: Adequate and appropriate systems of control must be in place and implemented to ensure that holders of stablecoins have access to complaints handling and redress mechanisms. The mechanisms must be adequate, accessible, affordable, independent, fair, accountable, timely and efficient, and do not impose unreasonable cost, delay or burden on holders
• Recovery planning and orderly wind-down: Adequate and appropriate systems of control must be in place and implemented for appropriate planning to support timely recovery and continuity of critical functions in case of significant operational disruption. A business exit plan should also be in place in case of a need for an orderly exit

F. Application process

• Preliminary consultation with the HKMA: A prospective applicant is encouraged to indicate its interest to the Licensing Team of the HKMA. This allows for initial, informal discussion to avoid a premature submission of the application and facilitate the subsequent processing of the application⁴4
• Consultation with home regulator: For a prospective applicant whose parent company conducts digital asset-related business or other financial services that are regulated in its jurisdiction of incorporation, the HKMA may consult with the relevant home regulator. Therefore, the HKMA encourages a prospective applicant to liaise with its parent company and consult with its home regulator prior to submitting an application to the HKMA to avoid delay in processing its application
• Documents required to be submitted at the time of application: The following documents must be submitted:

• • The HKMA’s prescribed application forms for corporate applicant, its shareholder controllers, directors, chief executive and stablecoin manager; business plan covering a three-year time horizon and beyond
  • Business and financial projections for the upcoming three years of operations
  • White paper
  • Intended trust arrangement on reserve assets, and reserve assets management policies and procedures
  • Intended custodial arrangement for reserve assets
  • Draft contract and terms and conditions to be entered into by the issuer and its stablecoin holder
  • Institutional risk (ML/TF) assessment
  • Issuance, redemption and distribution policies and procedures
  • Risk management policies and procedures
  • Corporate governance policies and procedures
  • Business practices and conduct policies and procedures
  • Incorporation documents
  • Ownership and shareholding structure
  • Latest audited financial statements for shareholder controllers
  • Company organisation chart and proposed staffing plan, etc⁵5
• The HKMA has warned that a person commits an offence under the SO if they have not submitted a licence application and yet describe themselves as an applicant, or behave in a manner that is reasonably likely to be understood as indicating that such person is an applicant. Interested parties who have not yet submitted their licence applications must exercise due caution in their communications to the public.

G. Transitional arrangements for pre-existing stablecoin issuers

Entities that were conducting a regulated stablecoin activity prior to 1 August 2025 (“Pre-existing Issuers”) may either apply for a licence under the SO or close down its operations in an orderly manner.

Pre-existing Issuers that wish to continue its operations must submit a licence application and provide a written declaration and undertaking to the HKMA by 31 October 2025. Having taken these steps and received an acknowledgement from the HKMA to that effect, a Pre-existing Issuer may continue its operations until 31 January 2026 and may be granted a provisional licence if the HKMA deems it to have a reasonable prospect of meeting the regulatory requirements.

Pre-existing Issuers that do not submit a licence application by 31 October 2025, or whose application is rejected, withdrawn or refused, will enter a one-month closing down period (from 1 November 2025 or from the date of application rejection, withdrawal or refusal) during which they may only operate for the sole purpose of winding down their pre-existing business. The HKMA may impose specific requirements during this period. Operating beyond the closing down period without a licence constitutes an offence.

H. Next steps

The HKMA welcomes engagement from prospective licence applicants. Interested parties are encouraged to initiate contact with the Licensing Team of the HKMA through  stablecoin_licensing@hkma.gov.hk by Sunday, 31 August 2025, to facilitate early dialogue, clarify regulatory expectations and receive preliminary feedback.

The HKMA advises prospective applicants who consider themselves sufficiently prepared and wish to be considered in the initial batch to submit their formal application by Tuesday, 30 September 2025.

Prospective applicants will have to prepare for a rigorous licensing process and ongoing regulatory scrutiny. Early engagement with the HKMA and legal and other professional advisers is essential to ensure readiness and compliance.

For further advice or assistance, please contact Sara Or and Michelle Ng of our Financial Services Regulatory team.

Reading materials:

1. Stablecoins Ordinance, Cap. 656 Laws of Hong Kong
2. Guideline on Supervision of Licensed Stablecoin Issuers
3. Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Stablecoin Issuers)
4. Explanatory Note on Licensing of Stablecoin Issuers
5. Explanatory Note on Transitional Provisions for Pre-existing Stablecoin Issuers