Hong Kong's Stablecoin Regulation will officially take effect on August 1st. HKMA Chief Executive Eddie Yue wrote an article on the HKMA official website on June 23rd, breaking down Hong Kong's stablecoin licensing system and global trends, emphasizing that stablecoins are merely a means to improve payment efficiency and do not have appreciation potential, and the market should not treat them as speculative assets.
Three Major Thresholds Constitute Hong Kong's Stablecoin Moat
Eddie Yue pointed out that the Stablecoin Regulation, which was passed in its third reading in May and will take effect on August 1st, requires issuers to obtain a license and meet three core standards: first, maintaining a 1:1 fiat currency reserve and transparent redemption mechanism; second, having sufficient capital, robust asset custody, and rigorous AML processes; third, submitting sustainable application scenarios. The HKMA stated that only a limited number of licenses will be issued in the first phase, highlighting its cautious approach.
Aligning with International Norms
Eddie Yue added that the regulation is designed based on the principle of "same activity, same risk, same regulation," echoing the Financial Stability Board's guidelines issued in 2023. The EU's Markets in Crypto-Assets Regulation (MiCA) went into effect in 2024, focusing on information disclosure and investor protection. The US is promoting the GENIUS Act, concentrating on 1:1 reserves and federal registration. Hong Kong has chosen to implement regulations during the regulatory vacuum to gain a voice.
Opportunities and Challenges Coexist
While the regulation is expected to attract compliance-oriented fintech companies to settle in Hong Kong, consolidating its international financial center status and driving cross-border payment innovation, the high thresholds may squeeze out small startups, limiting market diversity in the short term.
On the other hand, the cross-border AML challenges brought by the anonymity of stablecoin transactions still require deeper cooperation among different jurisdictions.
Calmly Facing Stablecoin Value
Eddie Yue emphasized that instead of expecting price appreciation, the focus should be on how to use stablecoins to reduce transaction costs and improve settlement efficiency. Only by returning to the essence of payment can stablecoins truly connect traditional finance with the digital economy, bringing long-term value to Hong Kong and global markets.
