Financial giant Citigroup examines storage solutions for stablecoins and offers crypto asset management services - Reasons explained here
Hong Kong has taken a significant step in the world of digital finance by implementing a new licensing regime for stablecoin issuers, effective from 1 August 2025. The Stablecoins Ordinance (Cap. 656) sets out the rules and regulations for anyone issuing or holding themselves as issuing regulated fiat-referenced stablecoins (FRS) in or from Hong Kong, or marketing such business towards Hong Kong residents.
The new regime, overseen by the Hong Kong Monetary Authority (HKMA), aims to provide a robust framework for consumer protection, financial integrity, and systemic risk mitigation in the stablecoin space. Key regulatory measures include a licensing requirement, strict anti-money laundering (AML) and compliance obligations, transparency, and guidance and supervision.
Licensing Requirement
Any entity issuing a fiat-referenced stablecoin in or from Hong Kong, or marketing such business towards Hong Kong residents, must obtain a license from the HKMA. This requirement is designed to ensure that all stablecoin issuers operate under a regulated and supervised environment.
Definition of Stablecoins
Stablecoins covered by the regime are cryptographically secured digital tokens intended as a medium of exchange, expressed as units of account or store of value, transferable electronically, operating on distributed ledgers, and purportedly maintaining a stable value linked to a single asset or basket of assets.
Anti-Money Laundering (AML) and Compliance
The regime imposes strict AML/CFT obligations. Notably, it requires the verification of the identity of every stablecoin holder unless issuers can prove to the HKMA that blockchain analytics or other measures sufficiently mitigate money laundering and terrorism financing risks.
Transparency
A public Register of Licensed Stablecoin Issuers is maintained, listing entities authorized under the regime. This transparency measure ensures that investors and the public can easily identify licensed stablecoin issuers.
Guidance and Supervision
The HKMA has published explanatory notes, transitional provisions for pre-existing issuers, a guideline on supervision of stablecoin issuers, and an AML/CFT guideline to clarify regulatory expectations for compliant operations.
Potential Impact on the Stablecoin Market
The new licensing regime positions Hong Kong among the first global jurisdictions with comprehensive licensing and oversight specifically for fiat-referenced stablecoin issuance. This development could potentially impact the operations of firms in the stablecoin market, as they may seek approval under the new regime to operate in the city.
Recent Warning from Regulators
In a related development, the Hong Kong Monetary Authority and the Securities and Futures Commission have issued a warning to investors about stablecoin-related speculation. The warning was issued due to sharp price swings caused by unverified licensing claims in the stablecoin space. Only a few firms have formally contacted the regulators regarding stablecoins.
This warning is a sign of increased oversight in the stablecoin market, indicating that regulators are closely monitoring the space and are prepared to take action when necessary to protect investors. As the stablecoin market continues to evolve, it is essential for firms to stay informed about regulatory developments and to comply with relevant rules and regulations.
[1] Source: Stablecoins Ordinance (Cap. 656) [2] Source: HKMA Explanatory Notes on Stablecoins Ordinance (Cap. 656) [3] Source: HKMA Guideline on Supervision of Stablecoin Issuers [4] Source: HKMA AML/CFT Guideline on Stablecoin Issuers [5] Source: HKMA Press Release on Stablecoins Ordinance (Cap. 656)
- Under the new licensing regime, as of 1 August 2025, any entity issuing or marketing stablecoins towards Hong Kong residents must obtain a license from the Hong Kong Monetary Authority (HKMA), which aims to ensure a regulated and supervised environment for stablecoin issuers.
- Stablecoins, as defined by the new regime, are cryptographically secured digital tokens that serve as a medium of exchange, units of account, or store of value, transferable electronically, operating on distributed ledgers, and maintain a stable value linked to a single asset or basket of assets.
- To mitigate money laundering and terrorism financing risks, the new regime imposes strict anti-money laundering (AML) and compliance obligations on stablecoin issuers, such as verifying the identity of every stablecoin holder, unless blockchain analytics or other measures can sufficiently mitigate these risks.
- For transparency purposes, a public Register of Licensed Stablecoin Issuers is maintained, listing entities authorized under the new regime, allowing investors and the public to easily identify licensed stablecoin issuers.
- As the stablecoin market evolves, regulatory guidance and supervision are crucial. In a related development, the Hong Kong Monetary Authority and the Securities and Futures Commission issued a warning to investors regarding stablecoin-related speculation, citing sharp price swings caused by unverified licensing claims, indicating increased regulatory oversight and a commitment to protect investors.
