As virtual asset trading surges in popularity, market momentum is spreading from Hong Kong’s stock exchange to mainland China’s A-shares. Among the most discussed topics on investor interaction platforms in Shanghai and Shenzhen, stablecoins have taken center stage—sparking interest from tech firms, financial institutions, and regulators alike.
On July 2, cybersecurity firm Tianrongxin revealed it has been researching blockchain, zero-trust architecture, privacy computing, and commercial cryptography technologies related to stablecoins. The same day, Zhuochuang Information clarified it is not currently involved in any stablecoin projects. Meanwhile, Tianfeng Securities announced its subsidiary received approval from Hong Kong’s Securities and Futures Commission (SFC) to provide virtual asset trading services. Xinguodu, on the other hand, stated it has no active stablecoin operations.
These disclosures—and clarifications—highlight growing market attention. Behind the scenes, a powerful trifecta is driving momentum: regulatory greenlighting, operational efficiency, and strategic positioning. At the heart of this transformation is Hong Kong’s landmark Stablecoin Ordinance, set to take full effect on August 1, 2025—the world’s first comprehensive regulatory framework specifically for fiat-backed stablecoins.
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The Strategic Significance of Hong Kong’s Stablecoin Ordinance
“Stablecoin development is now transitioning from policy formulation to real-world pilot applications,” said Kenny Kam, CEO of China Asset Management (Hong Kong). “Hong Kong’s Web3 ecosystem is gaining strong momentum, creating sustainable growth opportunities.”
Echoing this sentiment, Ken Chen, Co-Director of Research at AID Financial, emphasized that the ordinance establishes a globally leading regulatory framework. “This builds trust and compliance into the foundation of the market—enhancing Hong Kong’s credibility as a financial innovation hub.”
Legal experts at DeHeng Law Offices in Shanghai note that the swift passage of the ordinance reflects Hong Kong’s determination to compete internationally in digital currency regulation. By setting a new benchmark for fiat-backed stablecoins, Hong Kong reinforces its status as a premier international financial center and virtual asset gateway.
What Exactly Is a Stablecoin?
In simple terms, stablecoins act as the “digital cash” of the cryptocurrency world—bridging traditional fiat currencies like the U.S. dollar with decentralized digital assets.
According to Hong Kong’s Stablecoin Ordinance, a stablecoin is a form of cryptocurrency denominated in a unit of account or store of economic value that meets four key criteria:
- Widely accepted as a medium of exchange for payments, debt settlement, or investment
- Transferable, storable, or tradable electronically
- Built on distributed ledger technology (DLT) or similar systems
- Pegged to a single asset or basket of assets (e.g., USD, EUR, or commodities)
The first major stablecoin, Tether (USDT), launched in 2014. Each USDT token is backed by one U.S. dollar held in reserve—a model that has made it a cornerstone of crypto trading and cross-border payments.
Today, the global stablecoin market exceeds $250 billion. USDT dominates with over $150 billion in circulation, followed by Circle’s USDC at more than $60 billion. More than 250 different stablecoins now exist, reflecting a rapidly diversifying landscape.
The IPO of Circle (CRCL) in June 2025—dubbed the “first stablecoin stock”—further fueled public interest. Listed in the U.S., CRCL surged nearly 170% on its debut and reached $192 per share by July 1, underscoring investor confidence in regulated stablecoin ecosystems.
The Three Pillars of a Thriving Stablecoin Ecosystem
As highlighted by Guosen Securities Research Institute, successful stablecoin adoption depends on three interdependent stakeholders:
- Issuers: Responsible for issuance, maintaining reserves, and ensuring price stability through transparent mechanisms.
- Ecosystem Partners: Including exchanges, banks, and merchants who facilitate transactions and provide trust via custodial services.
- Users: Their engagement forms the foundation of network effects and liquidity.
For Hong Kong, the launch of a formal licensing regime for stablecoin issuers marks a pivotal shift from experimentation to institutionalization.
How Hong Kong Is Building a Regulated Stablecoin Infrastructure
On May 21, 2025, Hong Kong’s Legislative Council passed the Stablecoin Ordinance Bill after months of consultation—making Hong Kong the first international financial hub to establish a dedicated regulatory regime for fiat-referenced stablecoins.
Complementing this move, the government released the Hong Kong Digital Asset Development Policy Declaration 2.0, confirming that the licensing system administered by the Hong Kong Monetary Authority (HKMA) will go live on August 1.
Under the new rules, issuers must obtain an official license and comply with strict requirements around:
- Reserve asset management
- Redemption guarantees
- Capital adequacy
- Risk mitigation
To support innovation while managing risk, the HKMA launched a “Stablecoin Issuer Sandbox” in March 2024. This controlled environment allows firms to test their business models under regulatory supervision without full licensing.
By July 2024, five entities were admitted into the sandbox:
- JD Blockchain Tech (Hong Kong), backed by JD.com
- OSL Innovation
- A joint application from Standard Chartered Bank (Hong Kong), ANX Group, and Hong Kong Telecom (HKT)
Ant International has also signaled its intent to apply shortly after the ordinance takes effect, accelerating investments in global treasury operations and strategic partnerships.
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“Only a handful of licenses will be granted initially,” warns Guosen Securities. “Applicants must demonstrate real-world use cases—not just technical feasibility.”
Global Context: Where Does Hong Kong Stand?
While other jurisdictions are advancing stablecoin regulations, Hong Kong is moving faster than most:
- EU: Passed MiCA (Markets in Crypto-Assets Regulation), but its stablecoin provisions won’t fully apply until June 2025.
- UK: The FCA published proposals in May 2025 covering issuer solvency and custody rules.
- USA: The Senate advanced the GENIUS Stablecoin Bill in June 2025, mandating full reserve backing and annual audits for large issuers.
Hong Kong’s early-mover advantage positions it as a testbed for compliant innovation—a place where global fintech firms can pilot products before scaling worldwide.
FAQs: Your Key Questions Answered
Q: When does Hong Kong’s Stablecoin Ordinance take effect?
A: The law officially comes into force on August 1, 2025.
Q: Who can issue stablecoins in Hong Kong?
A: Only licensed entities approved by the HKMA, following strict capital, reserve, and governance standards.
Q: Are USDT and USDC legal in Hong Kong under the new rules?
A: They may operate during transition periods, but long-term access requires compliance with local licensing—likely involving local incorporation or partnerships.
Q: What is the purpose of the Stablecoin Issuer Sandbox?
A: It allows companies to test technology and business models under regulatory oversight before applying for full licenses.
Q: Can mainland Chinese firms participate in Hong Kong’s stablecoin ecosystem?
A: Yes—subject to compliance with both local regulations and cross-border financial controls.
Q: How does this affect traditional banking?
A: Banks gain new roles as custodians and liquidity providers, integrating digital assets into mainstream finance.
A Vision for the Future: Hong Kong as a Global Digital Asset Leader
With the Policy Declaration 2.0, Hong Kong signals deeper ambitions: enhancing market efficiency, boosting liquidity in digital asset trading, and expanding product offerings—from tokenized bonds to asset-backed tokens.
Kenny Kam envisions a future where Web3 technologies drive the tokenization of all financial assets. “Stablecoins already outpace some national currencies in emerging markets due to their speed and low cost,” he says. “Hong Kong’s CBDC trials, e-HKD initiatives, and stablecoin sandbox are laying the groundwork for a ‘tokenized money + assets’ financial system.”
This evolution could reshape global financial infrastructure. As geopolitical shifts increase demand for alternative payment rails, stablecoins offer resilience—and opportunity.
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Moreover, Hong Kong’s model may open new pathways for RMB internationalization through regulated digital channels—potentially influencing how trade and capital flows are structured globally.
Core Keywords: stablecoin, Hong Kong, virtual asset, regulation, Web3, digital currency, HKMA, tokenization