The Hong Kong stablecoin regulations will take effect in August! Only a single-digit number of licenses will be issued initially, prioritizing invitations to Compliance institutions.

The Stablecoin Regulations will take effect in August, Hong Kong promotes the development of compliant stablecoins

According to Zhitong Finance, the "Stablecoin Regulation" was passed by the Hong Kong Legislative Council in May of this year, officially establishing a licensing system for issuers of stablecoins pegged to fiat currencies. The regulation aims to improve the regulatory framework for local digital asset activities, ensure the stability of the currency and financial system, and further consolidate Hong Kong's position as an international financial center.

The Financial Secretary, Paul Chan, pointed out that the system emphasizes both market development and regulatory Compliance. Stablecoin issuers must possess key capabilities in the following areas:

• Reserve Asset Management and Safeguard Mechanism
• Stablecoin Mechanism and Redemption Strategy
• Technology security, risk control, and anti-money laundering Compliance capability

If cross-border applications are involved, the applicant must also develop a complete Compliance plan to ensure that they and their business partners hold the necessary licenses and comply with the relevant regulations of Hong Kong and other jurisdictions.

The Monetary Authority adopts an "invitation system," with only single-digit licenses issued in the first batch.

The Hong Kong Monetary Authority will adopt an "invitation system" in the initial phase of the system, actively engaging with potential Compliance issuers for background assessments and qualification screenings to ensure the healthy and orderly development of the market. Currently, more than 40 institutions have expressed interest, but the final number of approved entities is expected to be in single digits.

Xu Zhengyu also pointed out that he hopes to receive applications after the regulations come into effect and issue the first batch of licenses within this year.

Renminbi stablecoin needs cross-region coordination discussion

Regarding the market's concern about the issuance of the RMB stablecoin, Xu Zhengyu responded that if it involves currencies from other jurisdictions (such as the RMB), coordination with relevant institutions is required. He emphasized that stablecoins, as cross-border financial instruments, must be properly promoted within a Compliance framework.

Hong Kong will simultaneously introduce more cryptocurrency regulatory measures

In addition to stablecoin regulations, Hong Kong also plans to announce relevant regulations for cryptocurrency trading platforms, over-the-counter (OTC) services, and custodians in the coming months, further improving the local digital asset regulatory ecosystem.

Conclusion: The implementation of the Hong Kong stablecoin regulations marks the formal establishment of supervision, initially adopting an invitation system to highlight a prudent attitude. The policy focuses on anti-money laundering, cross-border compliance, and financial stability, providing a clear path for global institutions to conduct stablecoin business in Hong Kong, and laying the foundation for Hong Kong to build a compliance-oriented crypto financial center.