Hong Kong’s Legislative Council recently passed the Stablecoins Bill, establishing a licensing regime for fiat-referenced stablecoins (“FRS”) – virtual assets that are designed to maintain a stable value relative to certain assets, typically currencies. In this post we set out what businesses need to know about this significant regulatory development in Hong Kong’s virtual asset ecosystem and its impact on the cryptocurrency regulatory landscape.
The New Regulatory Framework: Key Points
Following the gazetting of the Stablecoins Bill on 6 December 2024, on May 21, 2025 the Legislative Council of Hong Kong took a decisive step in regulating the digital asset space by passing the Stablecoins Bill. This legislation creates a structured licensing regime for issuance of fiat-referenced stablecoins and related activities, with the aim of providing a balance between innovation and financial stability.
The Stablecoins Ordinance (the “Ordinance”), expected to come into effect later in 2025, requires any entity issuing an FRS in Hong Kong, or issuing an FRS referencing Hong Kong dollars, to obtain a license from the Hong Kong Monetary Authority (the “HKMA”). The government has indicated that transitional arrangements will be provided to facilitate industry adaptation.
Essential Compliance Requirements
Licensed stablecoin issuers must meet several critical requirements:
- Corporate Structure: The licensee must be a company or authorized institutions incorporated outside Hong Kong.
• Financial Resources: Minimum paid-up share capital of HK$25 million, or its equivalent, with adequate liquid assets to meet obligations.
• Reserve Management: Full backing of FRS with high-quality, liquid assets, with minimal investment risks, that are properly segregated from other asset pools. Further, the market value of the reserves must be at least equal to the par value of the FRS in circulation.
• Redemption Rights: Stablecoin holders must have the right to redeem at par value in the referenced currency without unreasonable and burdensome conditions and fees.
• Risk Management: Implementation of robust systems for AML/CTF compliance, fraud detection controls, governance, and operational resilience
• Disclosure: Publication of comprehensive white papers and regular reporting on reserve assets. - Governance: Chief executives, directors, stablecoin managers and licensee controllers must meet fit and proper standards, and those overseeing day-to-day operations are required to have relevant qualifications.
Top Concerns for Stablecoin Projects
Businesses entering Hong Kong’s stablecoin space typically face several key challenges:
- Licensing Process: Understanding documentation requirements and timelines.
• Reserve Compliance: Determining acceptable assets and custody arrangements.
• Technical Implementation: Meeting security and operational standards.
• Transitional Arrangements: Managing existing operations during the compliance period.
How Titus Can Help
Navigating Hong Kong’s evolving stablecoin regulatory landscape requires specialized expertise. At TITUS, we provide comprehensive support for stablecoin projects, including:
- Strategic regulatory assessment and licensing application support.
• Reserve management framework design.
• Compliance program development.
• Ongoing regulatory monitoring and advisory services.
With our deep experience advising major global stablecoin projects and extensive knowledge of crypto and blockchain regulations, we offer practical solutions that balance compliance with commercial viability.
Next Steps
The passage of Hong Kong’s Stablecoins Bill, and the soon to be effective Ordinance, creates both challenges and opportunities for businesses in the virtual asset space. Early preparation and expert guidance are essential for success in this new regulatory environment.
Have questions about how the Stablecoins Bill affects your business? Contact TITUS today for an initial consultation tailored to your specific circumstances.
This blog post is for informational purposes only and does not constitute legal advice. For specific guidance on your stablecoin project, please contact Titus for a consultation.