Hong Kong Passes Groundbreaking Stablecoins Bill
Main story
On 21 May 2025, the Hong Kong Legislative Council passed the much-anticipated Stablecoins Bill, positioning the city as a regulatory leader in Asia’s digital asset ecosystem. The Government welcomed the move, with Secretary for Financial Services and the Treasury Christopher Hui stating it “lays a solid foundation for Hong Kong’s virtual asset market.” The bill provides legal certainty for stablecoin issuers and offers a framework to protect consumers, manage systemic risk, and foster innovation. This is part of Hong Kong’s broader strategy to become a premier global hub for Web3 and digital finance.
Key provisions of the Stablecoins Bill
There are some major highlights of the legislation:
1. Licensing requirement
All entities issuing flat-referenced stablecoins (FRS) in Hong Kong – or those backed by the Hong Kong Dollar anywhere in the world, meaning even overseas entities – must obtain a license from the Hong Kong Monetary Authority (HKMA).
2. Scope
The bill applies to the issuance, redemption, and wallet services tied to FRS. It also covers marketing and promotional activities targeting Hong Kong residents.
3. Reserve asset standards
· Issuers must maintain high-quality and highly liquid reserve assets.
· Assets must match or exceed the value of issued stablecoins at all times.
· Assets must be unencumbered, meaning they cannot be pledged, rehypothecated, or otherwise used as collateral for other obligations.
· Assets must be segregated from the issuer’s own assets and held in custody with regulated financial institutions.
· Publicly disclosed monthly attestations and annual audits are required.
4. Redemption obligations
· Issuers must ensure timely redemption at par value.
· Redemption mechanisms must be clearly disclosed and regularly tested.
5. Consumer protection
· Mandatory disclosure requirements including risk warnings, operational details, and terms of use.
· Complaint-handling procedures must be implemented.
6. Governance and risk management
· Issuers must implement a robust risk management framework, including:
· Cybersecurity
· Anti-money laundering (AML)
· Operational resilience
· Senior management must meet “fit and proper” criteria.
7. Penalties for non-compliance
· Unlicensed issuance or misleading claims could lead to:
· Fines of up to HK$5 million
· Imprisonment for up to seven years
8. Timeline and Next Steps
The HKMA is expected to issue detailed implementation guidelines by Q3 2025, with full enforcement likely beginning in early 2026.
Why it matters
This law provided clear rules to reduce legal ambiguity amid global concerns about stablecoin risks. It also places Hong Kong ahead of many jurisdictions still struggling to regulate this fast-evolving sector.
For investors and Web3 companies, this means:
· Increased confidence in the legitimacy of Hong Kong-based stablecoin projects
· A more structured pathway for institutional involvement
· A likely increase in demand for complaint infrastructure and wallet solutions
How can VeriNumus help
As regulatory standards tighten, accurate and timely attestation is no longer optional – it is essential.
Our VeriNumus team specialises in independent attestation and assurance services tailored for digital asset businesses, including stablecoin issuers and wallet service providers.
Our services include:
· Real-time reserve attestations: Ensure your stablecoin reserves meet the HKMA’s high-quality and liquidity standards and provide transparency to investors.
· Annual audit support: Compliant, clear, and regulator-ready.
· Risk and controls assessment: Evaluate and enhance your operational and financial controls.
· Compliance readiness reviews: Align your process with the new HKMA licensing requirements.
Contact our VeriNumus team at info@verinumus.hk to ensure your business is well-prepared for the Stablecoins Bill requirements and thrives in Hong Kong’s regulated digital asset markets.