On August 1, 2025, a stablecoin ordinance will come into effect in Hong Kong, aimed at regulating fiat-backed stablecoins. This step is being taken under the oversight of the Hong Kong Monetary Authority (HKMA) to enhance stability and transparency in the cryptocurrency space.
Key Provisions of the New Legislation
The stablecoin legislation introduces a licensing scheme for issuers of fiat-backed stablecoins. It imposes strict compliance requirements on companies operating in this space. This is essential for improving protection, accountability, and transparency in cryptocurrency operations.
Impact of Regulations on Major Players
The new rules will affect significant players such as Ant Group and JD.com. The HKMA will oversee legal compliance and set high expectations for issuers, covering capital requirements, safeguarding reserve assets, redemption rights, governance standards, and AML/CFT protocols.
Reasons for Implementing New Rules
This initiative is driven by previous instabilities in stablecoins, such as the collapse of TerraUSD. The new legislation aims at creating a more stable environment for stablecoins, which may lead to broader acceptance of cryptocurrencies in Hong Kong and beyond.
The new stablecoin ordinance is expected to significantly reshape the cryptocurrency market in Hong Kong and may serve as a precedent for other countries developing similar regulations.
