On 21 May 2025, the Legislative Council passed the Stablecoins Bill (see our coverage here), which was gazetted as the Stablecoins Ordinance (Cap. 656; “SO”) on 30 May 2025, introducing a regulatory regime for fiat-referenced stablecoins issuers in Hong Kong. To seek feedback from the industry on the new requirements under the regulatory regime, the HKMA released the Consultation Draft Guideline on Supervision of Licensed Stablecoin Issuers (“Draft Guideline”) on 26 May 2025. The Draft Guideline sets out the HKMA’s provisional expectations regarding the minimum criteria (set out in Schedule 2 of the Ordinance) that licensed stablecoin issuers (“Licensees”) must fulfill.
The Draft Guideline covers a number of stablecoin specific requirements, including on reserve assets management, the issuance, redemption, and distribution processes, and the financial resources of Licensees. The Draft Guideline also provides for more general requirements, including on risk management, corporate governance, and the general business practices of Licensees.
A number of notable stablecoin specific requirements from the Draft Guideline are outlined below:
- Full backing of stablecoins: All specified stablecoins issued by Licensees must be fully backed on a 1:1 basis by a reserve assets pool. The HKMA further expects Licensees to conduct appropriate over-collateralisation to cover market risks.
- Scope and composition of reserve assets: Reserve assets must be of high quality, high liquidity, and contain minimal investment risks. Reserve assets should be denominated in the same reference currency as the stablecoin, or if there is more than one referenced currency, in the same ratio as that to which the specified stablecoins are referenced.
- Asset segregation: Effective trust arrangements must be in place to ensure reserve assets are segregated from other assets held by a Licensee. Any income or loss generated from the management of reserve assets should be attributed to Licensees.
- Stablecoin must be non-interest bearing: Licensees must not pay, or permit to be paid any interest to specified stablecoin holders (“Holders”). Interest-like incentives should not be paid to Holders, other than marketing incentives that do not amount to payment of interest.
- Stablecoin issuance: Licensees should issue stablecoins to customers as soon as practicable after receiving the funds. Funds received from customers should be the same as the referenced currency of the stablecoin. If there are multiple currencies referenced in the stablecoin, the funds received should be in the same ratio as that to which the specified stablecoins are referenced.
- Stablecoin redemption: Holders must maintain the right to redeem specified stablecoins at par value and to lodge a claim where there are shortfalls, even in the event of a Licensee’s insolvency. Licensees must not charge unreasonable fees or place unduly burdensome conditions for redemption. Valid redemption requests must be processed by the Licensee as soon as practicable and within one (1) business day after the day of receipt of the request.
- Stablecoin distribution: Licensees should ensure that the third party entities are permitted offerors under the SO. Licensees should also conduct risk assessments and due diligence on third party entities and distributors.
- Customer onboarding: Licensees should conduct customer due diligence on potential and actual Holders prior to subscription and redemption. Regarding overseas offerings, Licensees should ensure compliance with relevant local laws and regulations. Measures should be implemented to reduce the risk of location spoofing, such as examining network protocols to detect the use of virtual private networks, or by verifying IP addresses during the onboarding process.
- Minimum paid-up share capital: Licensees must maintain a paid-up share capital of HK$25,000,000 at all times (or equivalent in any currency that is freely convertible into Hong Kong dollars).
The consultation period concluded on 30 June 2025, and an updated version of the Draft Guideline is anticipated to be published shortly. The SO is expected to come into effect on 1 August 2025, after which the HKMA will begin accepting license applications. For the full Draft Guideline, please click here.
