Hong Kong Passes Law to Regulate Fiat-Pegged Stablecoins
Hong Kong has enacted legislation establishing a licensing regime for fiat-referenced stablecoins, aiming to enhance its status as a digital asset hub while addressing investor protection and financial stability concerns. The law mandates that FRS issuers obtain licenses from the Hong Kong Monetary Authority (HKMA) and adhere to requirements related to reserve asset management, redemption, client fund segregation, anti-money laundering, and disclosure standards. The ordinance follows the principle of "same activity, same risks, same regulation" and seeks to create a robust regulatory environment. Only licensed institutions can issue FRS in Hong Kong, and unauthorized advertisements will be prohibited. The stablecoin market in Hong Kong is relatively small compared to global volumes, with Tether being the preferred cryptocurrency. The legislation aligns with ongoing developments in the U.S., where the Senate is advancing its own stablecoin bill. The new ordinance is expected to take effect later this year, with transitional provisions for issuers.
