Hong Kong’s Financial Secretary Validates Launch of Stablecoin Licenses Beginning in August

According to a China Daily report published on 23 June 2025, Hong Kong’s Financial Secretary, Paul Chan Mo-po, has announced that the stablecoin ordinance will become effective on 1 August 2025. This makes Hong Kong the first jurisdiction worldwide to establish a regulated framework for stablecoins.

The execution of the ordinance will occur following its approval by Hong Kong’s Legislative Council on 21 May 2025. It requires entities or individuals issuing fiat-referenced stablecoins (FRS) or Hong Kong Dollar-pegged tokens within the administration to secure licenses from the Hong Kong Monetary Authority (HKMA).

Only institutions with licenses will be permitted to offer FRS, allowing retail investors access to stablecoins. The legislation indicates that these regulations are designed to safeguard the public and investors. Moreover, to reduce fraudulent activities, the ordinance restricts advertising to licensed FRS issuers only.

Mo-po has highlighted Hong Kong’s position as a testing network for China’s financial innovations and as a springboard for a Yuan-pegged stablecoin intended for cross-border transactions.

Additionally, this enables China’s central bank to utilize Hong Kong as a testing site for alternative payment solutions to help internationalize the Yuan.

The rationale for using Hong Kong as a sandbox is bolstered by the city’s offshore Yuan market fluidity pool, which is estimated to be around 1 trillion Yuan ($139 billion).

The HKMA’s licensing stipulations emphasize crucial aspects such as reserve asset management, appropriate separation of client assets, and robust stabilization mechanisms.

Hong Kong’s stablecoin regulation is now law.
Starting Aug 1, 2025, a license from HKMA is required to issue any fiat-pegged stablecoin.

Pegged to HKD or any fiat? You’re regulated—no matter where you’re based.#Stablecoins #CryptoRegulation #Web3Compliance pic.twitter.com/7ieEp2V7FS

— Shyft Platform (@shyftnetwork) June 23, 2025

In addition, the ordinance stipulates that issuers must ensure that stablecoin holders can redeem their tokens at face value under fair and reasonable terms.

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Companies Rush in To Become Qualified Issuers

Mo-po mentioned that multiple companies have already sought applications from the HKMA to become qualified issuers, with licensing expected to commence in the forthcoming months.

Reportedly, firms that have applied for the HKMA license this month comprise logistics entity Reitar Logtec and the international division of China’s fintech giant Ant Group.

Additionally, JD.com, the prominent e-commerce brand, is experimenting with HKD-pegged tokens through its fintech subsidiary JD Coinlink. Other fintech companies have been testing the stablecoin issuer sandbox since July 2024.

Simultaneously, tech corporations in the US are employing similar strategies to enhance cross-border payment frameworks. Companies like Apple, X, Airbnb, and Google are in preliminary talks with numerous crypto enterprises to integrate stablecoins.

Their choice to adopt stablecoins follows a bipartisan initiative by the Trump administration and US legislators who advanced the GENIUS Act and the Clarity Act.

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Internationalising the Yuan Faces Headwinds

An article from the South China Morning Post reports that the Yuan’s share of global reserves has decreased from 2.8% in 2022 to 2.2% in 2024. This decline occurred despite Beijing’s swift establishment of cross-border payment frameworks.

The article attributes this trend to worries regarding China’s debt challenges, deflation, and demographic issues that have hindered capital movement and overshadowed improvements in trade settlements.

“The emergence of stablecoins does not herald the creation of a new ‘supra-sovereign’ international monetary system,” the analysts asserted. “Instead, they merely extend fiat currency under current regulations to facilitate cross-border transactions.”

Moreover, the analysts have proposed restoring faith in the Chinese Yuan through structural reforms. This involves overhauling social welfare, restructuring debt, modifying taxes, and fostering a more growth-friendly ecosystem to promote the internationalisation of the Yuan.

Concerns regarding financial stability prompted China to prohibit crypto transactions in 2021. Recently, however, the nation has shown interest in exploring alternative applications for this asset class.

Pan Gongsheng, the Governor of the People’s Bank of China, affirmed during the Lujiazui Forum that technologies like distributed record and distributed ledgers have facilitated the advancement of central bank digital currencies (CBDC) and stablecoins, thereby transforming payment systems and expediting cross-border transactions.

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