1.   Introduction

Hong Kong[1] has taken two critical steps recently to advance its stablecoin regulatory framework:

(a)           Passing the Stablecoins Bill (21 May 2025)

The Legislative Council passed the Stablecoins Bill in May 2025, establishing a comprehensive legislative regime to regulate the issuance, offering and marketing of stablecoins in Hong Kong. 

The Hong Kong government has indicated that the Stablecoins Ordinance is expected to come into effect in 2025, to allow sufficient time for the industry to understand the requirements under the new licensing regime.

(b)           New stablecoin-related consultation documents (26 May 2025)

The Hong Kong Monetary Authority (HKMA) released the following consultation documents (Stablecoin Consultation Documents) shortly after passing the Stablecoins Bill to provide greater detail on the new stablecoin regulatory framework and the HKMA’s supervisory expectations:  

(i)             Consultation Draft Guideline on Supervision of Licensed Stablecoin Issuers (available here); and 

(ii)            Consultation Paper on the Proposed AML/CFT Requirements for Regulated Stablecoin Activities (available here). 

This KWM article provides an overview of the key takeaways from the Stablecoin Consultation Documents. 

The HKMA is inviting comments on the Stablecoin Consultation Documents until 30 June 2025.

Details of the stablecoin regulatory regime

KWM has published two in-depth analyses (including infographics) on the stablecoin regulatory regime and the Stablecoins Bill: 

2.   Key takeaways from the Stablecoin Consultation Documents  

The table below summarises the key requirements for stablecoin issuers under the Stablecoin Consultation Documents.

3.   Impact on distributors and other intermediaries

The Stablecoin Consultation Documents primarily focus on issuers.  However, there are several key takeaways for distributors and other intermediaries:

(a)           Intermediaries must be licensed: Intermediaries in Hong Kong must be “permitted offerors”, whether they are part of primary issuance or secondary trading.  Besides issuers themselves, permitted offerors include the following:

            (i)   Virtual asset trading platforms (VATPs) regulated by the Securities and Futures Commission (SFC).

            (ii)   Authorized institutions regulated by the HKMA (eg banks).

            (iii)   Licensed corporations regulated by the SFC that are permitted to engage in Type 1 (dealing in securities) licensed activity.

            (iv)  Future licensed over-the-counter (OTC) virtual asset service providers, once the proposed new licensing regime for OTC virtual asset brokerage is implemented. 

For further detail, see “Hong Kong Proposes to Regulate OTC Virtual Asset Brokerage Services: 10 Key Things You Should Know” (published on 16 February 2024, available Here).

(b)           Diligence requests from Issuers: An issuer needs to conduct in-depth diligence on its proposed stablecoin distributors or liquidity providers.  This includes the licensing status of intermediaries and other important factors such as their size, capabilities, expertise, track record, reputation, governance, conduct, risk management and internal control measures.

(c)           “Travel Rule” compliance is essential: This is a core obligation of the issuer, but it will also impact:

             (i)   any institution that ‘hosts’ primary purchaser wallets given the duties of issuers (both upon issuance and redemption); and

             (ii)   those already subject to the Travel Rule such as VATPs.

(d)           Ongoing monitoring for secondary market transactions: Issuers are required to implement additional ongoing monitoring measures for stablecoin transactions in the secondary market. For example, confining stablecoin circulation to financial institutions and VATPs, blockchain screening, blacklisting or whitelisting wallet addresses.

(e)           More rules on the way: The HKMA has signalled that additional guidelines will be issued after consulting the relevant market participants later in 2025.

4.   Where can I learn more about stablecoins and other digital assets?  Come speak to us

We have advised issuers and platforms on digital assets over many years.  We also have extensive experience assisting stablecoin issuers, SVF providers and virtual banks with their HKMA licensing applications, ever since those licensing regimes were first introduced in Hong Kong. 

We can provide a range of support for your stablecoin and digital assets-related projects.  

Come speak to us - we would be pleased to share our further insights with you. 

Our articles and other resources on digital assets in Asia are available at kwmdigital.asia  

This publication is for general information purposes only and should not be construed as legal advice.