Hong Kong is tightening its grip on the digital asset market with a new regulation that will make it a criminal offense to promote unlicensed stablecoins to the public starting August 1, 2025. The move comes as part of the city’s upcoming Stablecoins Ordinance, aimed at protecting retail investors and establishing a regulated Web3 ecosystem.
HKMA Chief Warns Against ‘Frothy’ Market Hype
Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), issued a public warning ahead of the regulation’s implementation. In a blog post, he cautioned9 against speculative hype and potentially fraudulent stablecoin promotions that have emerged amid a surge in interest around fiat-referenced stablecoins (FRS).
“We urge the public to stay vigilant to avoid violating the law inadvertently,” Yue wrote, adding that certain marketing activities have shown signs of market manipulation.
New Rules Limit Public Access and License Supply
Under the new law:
- Only licensed entities will be allowed to issue or promote stablecoins to retail investors.
- Firms without a license may only offer stablecoins to professional investors.
- A limited number of licenses will be issued in the initial phase.
- The first batch of approvals is expected later this year.
The HKMA also plans to publish an explanatory note next week, detailing the license application process and assessment criteria.
Over 40 Companies Interested, But Few Are Ready
According to Yue, more than 40 firms have contacted regulators expressing interest in launching stablecoin-related businesses. However, many of these proposals remain underdeveloped, with several companies lacking robust business models, risk frameworks, or technical capabilities.
Notable applicants reportedly preparing to enter include:
- Ant Group
- JD.com
- Standard Chartered
- Circle
Several law firms in Hong Kong also confirmed ongoing consultations with clients preparing submissions once the law goes live.
Strict Requirements for Stablecoin Issuers
The Stablecoins Ordinance outlines stringent requirements for license holders:
- Stablecoins must be fully backed by high-quality, liquid assets in the same currency.
- Eligible reserves include cash, bank deposits, or government bonds.
- All reserves must2 be held in trust, segregated from company funds, and protected from creditor claims during insolvency.
Yue stressed that media hype or speculative announcements about stablecoin ambitions should not be mistaken for regulatory approval.
“A mere announcement of intention… is enough for some listed companies to grab headlines and send stock prices soaring,” he said. “Investors should remain calm and exercise independent judgment.”
Part of a Global Regulatory Shift
Hong Kong’s move aligns with global efforts to regulate stablecoins. The Bank for International Settlements (BIS) recently flagged stablecoins as potential risks for money laundering, especially in cross-border contexts.
Meanwhile, the United States passed its first federal stablecoin law earlier this month under President Trump’s administration—signaling growing consensus worldwide on the need for tighter digital asset regulations.
HKMA’s Next Steps: AML Guidelines Coming Soon
To support the licensing regime, the HKMA will release updated supervisory and anti-money laundering (AML) guidelines by the end of July. These will further clarify compliance expectations, though only minor changes are expected compared1 to previous drafts.
“Regulation is an art of balancing divergent objectives,” Yue said. “Stronger oversight may slow short-term growth but will ensure long-term stability and investor confidence.”
