"Hong Kong takes the lead in stablecoin regulation, adding more leverage to digital financial competition"

On May 21, the Hong Kong Legislative Council officially passed the third reading of the Stablecoin Bill. The bill states that anyone who issues fiat stablecoins in the course of business in Hong Kong, or issues fiat stablecoins claiming to be pegged to the value of the Hong Kong Dollar, must apply for a license from the Financial Commissioner. This regulation clarifies the entry threshold for stablecoin issuance and incorporates stablecoin issuance into the regulatory framework.

In terms of regulatory requirements, licensees must meet various minimum standards. Regarding capital adequacy, a minimum paid-in capital of HKD 25 million is required to ensure that the issuing institution has sufficient financial strength to withstand risks. For reserve asset management regulations, the issuer must hold high liquidity assets equivalent to the value of the circulating stablecoin to ensure the stable value of the stablecoin and to be able to redeem promptly in response to redemption demands. The redemption clause grants users the right to redeem without additional conditions, fully protecting the rights and interests of investors. Furthermore, applicants must also comply with requirements related to anti-money laundering and counter-terrorist financing, risk management, disclosure regulations, as well as auditing and appropriate personnel, thereby establishing a comprehensive and stringent regulatory system.

The impact of the Hong Kong regulatory bill passing ahead of the United States.

The fact that Hong Kong has taken the lead in passing a stablecoin regulatory framework is significant compared to the ongoing progress of the U.S. “GENIUS Act”. Although the “GENIUS Act” aims to establish a regulatory system for stablecoins, it was rejected in the voting in early May due to issues such as unclear distribution of regulatory authority and mechanisms related to anti-money laundering and consumer protection principles. Despite recent progress, full passage still requires time. Meanwhile, Hong Kong has filled the regulatory gap for fiat-pegged stablecoins with clear and explicit legislation, providing definitive regulatory guidelines for the stablecoin market, reducing market uncertainty and potential risks, and creating a safer and more transparent trading environment for investors.

**From the perspective of the global stablecoin regulatory landscape, Hong Kong took the lead in passing the bill this time, taking a key step in the field of global virtual asset regulation. Hong Kong has legislated to clarify the cross-border regulatory rules for stablecoins and reserved room for mutual recognition with international regulators, providing a model for other jurisdictions to follow. This will help enhance Hong Kong’s voice in the global digital finance field, attract more international digital financial enterprises and projects to Hong Kong, and promote Hong Kong to become a global digital financial innovation and regulatory highland. **

Investment Opportunities and Risks in the New Era of Hong Kong Stablecoin Regulation

For investors, the passage of the Hong Kong stablecoin regulatory bill brings new investment opportunities. On one hand, the launch of compliant stablecoins will provide a more stable and reliable medium of exchange for the digital asset market, promoting increased activity in digital asset trading, and related digital asset trading platforms, stablecoin issuers, and other industry chain enterprises are expected to benefit. On the other hand, the expansion of stablecoin applications in scenarios such as cross-border remittances may give rise to new cross-border financial service models and investment opportunities.

**However, the risks cannot be ignored. Stablecoin issuers must meet strict regulatory requirements, and operational costs may increase significantly. If these costs cannot be effectively absorbed, it may impact the company’s profitability. At the same time, global stablecoin regulatory policies are still changing and improving, and the Hong Kong stablecoin market may also be affected by changes in the international regulatory environment. Investors need to closely monitor policy dynamics, reasonably assess risks, and seize investment opportunities. **