Hong Kong’s newly passed stablecoin legislation is being hailed as a milestone for the city’s ambitions in the digital asset space. Lauded by industry figures like Animoca Brands chairman Yat Siu, the law signals a firm leap toward establishing Hong Kong as a global stablecoin hub. However, optimism over the regulatory clarity comes tempered by rising concerns around the high costs of compliance—especially for smaller firms.
Passed on May 21, the law mandates that all issuers of stablecoins—particularly those pegged to the Hong Kong dollar—must obtain licenses from the Hong Kong Monetary Authority (HKMA). This mirrors the stringent standards already applied under the 2023 Virtual Asset Trading Platform (VATP) regime, with expectations around auditing, disclosures, and reserve backing.
Legal experts note that while the framework is poised to enhance transparency and market confidence, it could create short-term barriers to entry.
“Regular independent audits and strict disclosure obligations further bolster confidence in the sector, although in the short run it may increase operational costs and limit market entry, particularly for smaller or emerging stablecoin issuers,” said Amita Haylock, a technology partner at Mayer Brown.
“The clarity provided in the stablecoins ordinance would encourage larger financial institutions to build token-based products in Hong Kong.”
By placing stablecoin oversight under the HKMA, rather than the Securities and Futures Commission, the government aims to tailor regulations for each asset class—fostering innovation while managing risk in a rapidly evolving space.
Sandbox Projects Ready to Scale Under New Law
With the legislation now in effect, Hong Kong is betting on its first-mover advantage. Yat Siu of Animoca Brands stated that the city had “pulled ahead of other regions,” especially when compared to the U.S., where the Genius Act has passed the Senate but a broader stablecoin framework remains incomplete.
Siu emphasized that pairing regulation with real-world implementation is the next big test. His company, Animoca, is actively involved in the HKMA’s stablecoin sandbox program alongside HKT and Standard Chartered. The trio plans to form a joint venture to apply for a license under the new ordinance.
Another key participant, RD Technologies—through its arm RD InnoTech—also sees the law as a springboard for commercial rollouts. CEO Rita Liu highlighted the sandbox’s value in preparing firms for full compliance.
“We’ve gained critical insights into designing robust stabilisation mechanisms, ensuring compliance with anti-money-laundering and risk management standards, exploring different use cases, and prioritising user trust through transparent operations,” Liu said.
For firms already working within the sandbox, the new law is not just a regulatory milestone—it’s an opportunity to scale their offerings under a globally respected legal framework.
Global Industry Applauds Hong Kong’s Rapid Approach
Hong Kong’s regulatory sprint has caught the attention of international players. TRON founder Justin Sun, speaking after a May 22 dinner with U.S. President Donald Trump, praised both Washington’s and Hong Kong’s recent momentum—but stressed that concerns over liquidity in Hong Kong are overblown, given the strong dominance of U.S. dollar-pegged stablecoins.
Observers increasingly see Hong Kong as the Asia-Pacific leader in stablecoin legislation. In contrast to more cautious approaches from regional peers like Singapore and Australia—who have leaned on older financial laws or guidance memos—Hong Kong has created a robust, standalone legal structure.
“Hong Kong has implemented a comprehensive, dedicated legislative framework for stablecoins,” said Amita Haylock.
“It includes clear statutory obligations, offences, and regulatory powers.”
As global jurisdictions race to define the future of stable digital currencies, Hong Kong’s ambitious law is already setting a high bar. With licensing now underway and sandbox projects maturing, the city is on track to become a key regulatory anchor for compliant, scalable stablecoin innovation.
Quick Facts
- Hong Kong passed a new stablecoin law on May 21, 2025
- Licensing under the HKMA is mandatory for all issuers, especially HKD-pegged coins
- The law requires strict auditing, disclosure, and reserve standards
- Sandbox participants include Animoca Brands, RD Technologies, and Standard Chartered
- Global players see Hong Kong as a model for dedicated stablecoin legislation
