HKMA passes stablecoin law demanding issuers are licenced

The Stablecoin Bill, passed by the Legislative Council, will take effect later in 2025, requiring stablecoin issuers in the region to obtain a licence from the Hong Kong Monetary Authority (HKMA). The law also aims to protect the general public and investors by enabling only licenced firms to advertise such assets.

New laws by HKMA

Representatives from HKMA mentioned that the legislation established a risk-based, pragmatic, and flexible regulatory regime. Such a regulatory environment would support the sustainable and healthy development of the city’s ecosystem for stablecoins and digital assets. The organisation will conduct consultations on details od the legislation, such as reserve requirements, client asset segregation, risk management, disclosures, and other issues.

Globally, stablecoin trading volume reached USD 27.6 trillion in 2024, according to a report by cryptocurrency exchange operator CEX.io. this surpasses the combined volume of Visa and Mastercard transactions over the same period.

This move follows other initiatives from the HKMA. In April, the monetary authority partnered with Cyberport to roll out the second cohort of the GenAI Sandbox initiative, which offers a risk-controlled environment for banks to develop and test solutions driven by AI. As part of the second cohort, the HKMA and Cyberport intend to roll out the GenA.I. Sandbox Collaboratory, a platform including a series of practical workshops that support early engagement between banks and technology providers. With these workshops, the two organisations plan to facilitate the conversion of problem statements into practical use cases, which can then be tested in the GenA.I. Sandbox.

The organisation also expanded its anti-fraud measures for digital banking as part of an extended framework which counters increasingly sophisticated fraud schemes, including those involving AI and deepfakes.

Alongside its new bills for stablecoins, the HKMA launched a guideline for authorised institutions seeking to offer staking services for crypto. The measures were rolled out through a circular and aimed to ensure suitable internal controls, transparency, and risk management. Moreover, the HKMA’s initiative comes amid the scaling adoption of digital assets and proof-of-stake blockchain protocols.