Web3 Lawyers Full Interpretation of the Stablecoin Ordinance: From Regulatory Framework to Market Significance, How Did

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2025 can be regarded as the first year of stablecoins. On May 21, Hong Kong completed the second and third readings of the Stablecoin Bill (the bill was formally passed by the Legislative Council, and then issued the Stablecoin Ordinance (hereinafter referred to as the Ordinance) on May 29, 2025, and announced that it will officially take effect on August 1. This event has triggered a wave of enthusiasm inside and outside the circle, and Crypto Salad has also received a large number of related consultations. We found that everyone is generally concerned about what practical benefits this bill can bring and what impact it will have on the Web3 circle; they also hope to understand whether it is necessary for them, as participants in the upstream and downstream of the industry chain, to devote themselves to the construction of stablecoins, and from which angles they should try to enter; if they intend to issue compliant stablecoins as a licensed institution, how to apply for relevant licenses…

Prior to this, Crypto Salad has already made a detailed interpretation of the core concepts of stablecoins, such as its 去中心化金融nition, characteristics, and functions. For details, please see: Web3 Lawyers Interpretation: Are Stablecoins Definitely Stable? Why are Stablecoins So Important? ; At the same time, it also discussed the regulatory focus of stablecoins, and made an in-depth comparison of the respective stablecoin regulatory frameworks in the United States and Hong Kong. For details, please see: Web3 Lawyers In-depth Interpretation: What are the regulatory focuses of stablecoins? What are the differences between the stablecoin regulatory frameworks in the United States and Hong Kong? .

In this article, Crypto Salad will no longer elaborate on the connotation and value of stablecoins themselves, but will focus on the new Hong Kong Ordinance and sort it out in more detail to explore the answers to the following questions:

What are the minimum requirements to apply for a stablecoin license?
What can you do with a stablecoin license?
What are the specific provisions for reserve asset management and redemption mechanisms?
What impact does stablecoin have on cross-border RMB payments?
What does the passage of the Ordinance mean for the industry? Will Hong Kongs financial market landscape undergo a major change?

……

1. Interpretation of the regulatory framework of Hong Kong’s Stablecoin Ordinance

1. What kind of stablecoin does Hong Kong regulate?

The essence of a stablecoin is a 加密貨幣 asset that achieves price stability through a specific mechanism, such as anchoring to reserve assets. The Regulations clearly define stablecoins as: a digital form of value protected by encryption, with the following characteristics:

Its value is expressed as a unit of account or form of economic storage;
To pay, settle debts or invest;
can be transferred, stored or traded electronically;
Run on distributed ledger or similar technology;
Its value is ostensibly anchored to a single asset or portfolio of assets.

同時， the Regulations specifically exclude some forms of digital value that are not within their regulatory scope, such as digital currencies issued by central banks and related banks, points systems as limited-purpose tokens, assets deemed to be securities or futures contracts (such as security tokens), stored value amounts regulated by the Payment Systems and Stored Value Instruments Regulations, and traditional bank deposits.

However, the Ordinance does not regulate all stablecoins. It limits the scope of regulation to specified stablecoins operating in Hong Kong. Specified stablecoins are a term unique to the Hong Kong government. According to the definition in Article 4 of the Ordinance, specified stablecoins refer to stablecoins that maintain their stable value by reference to one or more official currencies, units of calculation or forms of economic value storage specified in the announcement of the HKMA, or a combination of the above two. In fact, they are what we commonly call legal currency-pegged stablecoins (hereinafter referred to as legal currency stablecoins).

It can be seen that the Hong Kong government chose to focus on the payment function as the regulatory focus, because the legal currency stablecoin is the most likely to be used as a quasi-currency in the financial transaction market based on its high collateral ratio with legal currency, high value stability and low degree of decentralization. When stablecoins become a common payment tool and expand their scale of use, once a run or de-anchor occurs, it will inevitably affect the entire financial ecosystem. Therefore, the demand and requirements for stablecoin supervision are very high. In addition, the Regulations clearly restrict licensees from paying interest on the specified stablecoins they issue, reducing the necessity of them being regarded as savings financial products. Other non-payment purposes and stablecoins with unstable currency values, such as algorithmic stablecoins, are also not included in this first round of supervision.

2. What activities of stablecoins are restricted?

After the adoption of the Regulations, anyone who conducts or indicates that they conduct regulated stablecoin activities must hold a license. One of the core regulatory aspects of the Regulations is to define which activities belong to regulated stablecoin activities. Article 5 provides a clear scope of restricted activities at this stage:

(1) Issuing specified stablecoins in Hong Kong;

(2) issuing specified stablecoins pegged to the Hong Kong dollar outside Hong Kong (regardless of the reference ratio);

(3) The Monetary Authority may, after consulting the Financial Secretary, announce the specified activities;

(4) Actively promoting to the public that one is carrying out or appears to be carrying out the above activities.

In addition, Part 2 of the Ordinance also details other regulatory scopes for specified stablecoins:

Offer or hold yourself out as offering to offer a specified stablecoin:
Advertise regulated stablecoin activities and offers as described above;
Fraudulent or deceptive activities in relation to or for the purpose of inducing another person to enter into an agreement to acquire, dispose of, subscribe for or underwrite a specified stablecoin.

In general, the Regulations focus on the issuance, distribution, and retail of stablecoins. The series of restrictions on offers and advertising are all intended to limit stablecoins to the category of payment tools and prevent them from being packaged as investment products that can be hyped. Issuers, platform operators, wallet service providers, and other roles are all included in the regulatory system to ensure that the entire chain of the stablecoin ecosystem is regulated.

From the perspective of jurisdiction, the Hong Kong government not only regulates stablecoins issued in Hong Kong, but also regulates the issuance of stablecoins pegged to the Hong Kong dollar outside Hong Kong. Even if the issuance does not occur in Hong Kong, as long as the stablecoin it issues is pegged to the Hong Kong dollar, regardless of the reference ratio, it will be regarded as having potential local financial influence and will be included in the supervision. This arrangement reflects Hong Kongs high attention to monetary sovereignty and financial stability, and prevents unauthorized digital assets from misleading the public in the market for profit by using the name of pegging to the Hong Kong dollar.

3. How to apply for a stablecoin license?

The licensing system is the core regulatory mechanism established by the Ordinance. Any company that issues, manages or distributes specified stablecoins in Hong Kong or an authorized institution incorporated outside Hong Kong must submit a formal license application to the Monetary Authority. The Ordinance does not set up a variety of different licenses, but is based on a unified license, with differentiated conditions attached when granting a license based on the specific business and risk characteristics of the applicant.

The approval process for a license is relatively simple. You can simply submit an application to the Monetary Authority and wait for his/her decision. The Monetary Authoritys main review focus is whether the applicant meets the minimum standards set out in Schedule 2. The specific conditions are as follows:

(1) Sufficient financial resources and liquid assets

Applicants are required to pay a share capital of not less than HK$25 million or its equivalent in other currencies; or hold other financial resources with a value of HK$25 million or more and be approved by the Monetary Authority.

(2) Allocate corresponding reserve assets

In order to safeguard the credibility and repayment capacity of stablecoins, the Hong Kong government requires licensees to comply with the following conditions when allocating reserve assets corresponding to stablecoins:

Asset isolation: The reserve asset portfolio is separated from other reserve asset portfolios maintained by the licensee and is not affected by the licensees other debts or operating conditions. In addition, the reserve assets should also be independent of the licensees other corporate assets to ensure legal and financial isolation;
Payment guarantee: The market value of the reserve assets is not less than the total face value of the unredeemed stablecoins in the market, with full coverage and ready for redemption at any time;
Hong Kong dollar anchored assets: Unless the prior written approval of the Monetary Authority is obtained, the reserve assets must directly reference the same reference assets to which the specified stablecoin is anchored;
The reserve asset portfolio must be of high quality and high liquidity with minimal investment risk;
Licensees must establish risk management and internal audit systems;

Licensees must disclose the following information to the public:
its policy for the management of its reserve assets;
The possible risks of this strategy and how to evaluate them;
the composition and market value of its reserve assets;
The results of regular independent reviews and audits of its reserve assets.

The licensee must have a sound control system in place.

(3) Establishing a redemption mechanism

Licensees must provide redemption rights to each holder of the specified stablecoins they issue, and may not impose overly onerous conditions to restrict the redemption of specified stablecoins. No fees may be charged for redemption.

(4) Suitable Person

A suitable person refers to the chief executive officer, director, stablecoin manager or controller of a licensee. The licensee must have and implement a sound and appropriate control system to ensure that the Monetary Authority is clear about the identity of each controller of the licensee.

(5) Management requirements

Managers need to have relevant professional knowledge and experience, and licensees also need to manage this accordingly.

(6) Prudence and risk management

The licensee must establish and implement sound and appropriate risk management policies and procedures to manage the risks arising from conducting the licensed stablecoin activities related to the licensee, including: security measures and internal risk controls, and effective methods for detecting fraud and attempted fraud.

(7) Measures to combat money laundering and terrorist financing

Licensees must establish and implement sound and appropriate control systems to prevent and combat money laundering or terrorist financing that may arise in connection with their licensed stablecoin activities.

(8) Business activity requirements

Licensees must have dedicated and sufficient resources to carry out licensed stablecoin activities, and any activities other than licensed stablecoins must obtain the consent of the Monetary Authority.

(9) Information disclosure requirements

The licensee must publish a white paper for each type of specified stablecoin it issues to provide comprehensive and transparent information about that type of specified stablecoin. The licensee must also provide information about the licensee’s complaint handling and compensation mechanism to holders of the stablecoins it issues.

(10) Recovery plan and orderly downsizing

Licensees must have and implement robust and appropriate control systems to make appropriate plans to support critical functions that enable the immediate resumption of stablecoin activities in the event of significant operational disruptions.

It can be seen that the Hong Kong government has maintained consistent high standards and strict requirements for applicants for stablecoin licenses. For institutions that intend to apply for stablecoin licenses, it is necessary to realize that this is not just an application process for a license, but a comprehensive test of the companys capital strength, compliance capabilities, and risk control system.

4. What are the compliance obligations of licensees?

Once a license is obtained, the licensee must fulfill a series of ongoing compliance obligations, and violators may face sanctions, license revocation, or even criminal liability.

The main obligations include:

(1) Obligation to pay annual fee

The annual licence fee is HK$113,020 and the licensee must pay the initial licence fee within 14 days of the effective date stated in the written notification of approval of the application issued by the Monetary Authority, and the same amount of annual fee must be paid every year before this date.

(2) Public display of license plate number

Licensees must publicly display their license number on any relevant information regarding licensed stablecoin activities and on user-facing application interfaces.

(3) Continuously meet minimum standards

Any licensee who fails to maintain the minimum standards or believes that there is a significant possibility that he or she will be unable to meet his or her obligations, is insolvent or is about to suspend payment must report to the Monetary Authority promptly and proactively and provide all relevant facts, circumstances and information, otherwise he or she may face serious conviction.

(4) Obligation to report changes to information

Any relevant changes in address, nature of business, equity structure, etc. must be reported in a timely manner, otherwise you will face penalties such as fines.

It is worth mentioning that obtaining a license is not a “once and for all” thing. According to Article 19 of the Regulations, the Monetary Authority may still temporarily add or modify licensing conditions based on market risk changes or regulatory assessment results. The license holder must make a written statement to the Commissioner within the time limit set by the Commissioner to explain the additional or modified conditions.

It can be seen that the Regulations have high requirements for the financial strength of licensees, and are more suitable for enterprises with sufficient funds and large assets to make medium- and long-term layouts from a strategic level. For medium-sized enterprises, if they want to invest their main resources in stablecoin issuance projects, it is recommended to fully evaluate the feasibility and sustainability before making decisions. Because not only does it require paid-in equity or equivalent assets of no less than HK$25 million as a threshold, but it also requires the allocation of high-quality reserve assets of equal value, and the assumption of various compliance, audit and system maintenance costs during the operation of stablecoins. Long-term investment should not be underestimated.

5. What are the regulations for the cancellation, revocation and suspension of licenses?

If a licensee no longer meets regulatory requirements, the Ordinance also gives the Monetary Authority a fairly broad range of powers to intervene:

Suspension of licence: If the Monetary Authority considers that a ground for revoking a licence specified in Schedule 4 above exists, the Monetary Authority may issue a written notice to the relevant licensee to revoke the licence for a period not exceeding 6 months. During the period of suspension, the licensee shall not carry out relevant business activities and offenders shall be subject to a fine and imprisonment.
Voluntary revocation of licence: The grounds for revocation of licence are detailed in Schedule 4, including bankruptcy of the licensee, false declaration of information, breach of licence conditions or substantial cessation of business activities, etc.

6. What protection does the Regulation provide for stablecoin users?

The Ordinance is not only a regulatory tool for issuers and practitioners, but also a legal protection mechanism for the end users of stablecoins. The Hong Kong government has established a number of core arrangements for user protection in the Ordinance. Crypto Salad lists the two most important sections in this article to help users fully understand their rights and potential risks.

Strictly regulate the publicity and marketing activities of licensees

Article 10 of the Regulations explicitly prohibits any unlicensed person from advertising to the public regarding stablecoin activities or offers. Whether it is offline promotion, online social media marketing, or promotion through third-party platforms, it falls within the scope of supervision.

Article 12 further stipulates that any act of inducing others to obtain specified stablecoins, if it involves deceptive statements such as false descriptions, concealment of risks, exaggeration of returns, etc., will constitute a criminal offense. Even if the inducement does not ultimately lead to the conclusion of a transaction, it may still be held accountable according to law.
User rights protection mechanism

What stablecoin holders are most concerned about is the value security and redemption guarantee of stablecoins. The Regulations have established a relatively robust protection mechanism for this purpose.

The Regulations require licensees to have sufficient reserve assets to support the value of the stablecoins they issue. These assets must exist, be highly liquid, and be able to be redeemed promptly when users initiate redemption requests. In addition, issuers should have an audit mechanism in place, with qualified third parties regularly reviewing the matching between reserve assets and the total issuance of stablecoins to prevent empty capital pools or mismatched funds. Under normal operating conditions, licensees shall not suspend redemption without reason, delay processing, or set harsh redemption thresholds. If redemption difficulties occur, they must be reported to the Financial Services Commissioner immediately.

Overall, the Regulations have made systematic and in-depth provisions on the compliance framework and user protection mechanism of the stablecoin industry. For the majority of investors, the most important thing is to learn to identify licensed stablecoin issuers and rationally participate in stablecoin transactions and holdings. With the formal implementation of the Regulations, marginal projects and niche stablecoins that do not meet the licensing standards will inevitably face the risk of market clearing or even collapse. Investors should be highly vigilant and not blindly chase high prices or trust unauthorized product promotions.

7. How broad is the HKMA’s supervisory authority?

From the above analysis, it is obvious that the role of the Monetary Authority is important in Hong Kongs stablecoin regulatory framework. This means that the HKMA not only assumes the administrative role of approving licenses, but also holds very extensive powers of supervision, investigation and direct intervention. In general, the Monetary Authority has the power to approve and issue licenses; daily supervision authority; and the power to directly investigate and collect evidence when the licensee faces major operating risks.

Under Part 5 of the Ordinance, the Monetary Authority may conduct an investigation directly and may instruct or appoint a human investigator to conduct a specific investigation. The investigator may request the licensee under investigation to provide evidence, information or explanation, and may make an application to the Court of First Instance.

This series of regulations shows that the HKMA has almost full regulatory authority over stablecoins. The key is that it has quasi-judicial investigation powers, which are highly deterrent and enforceable.

Crypto Salad Summary:

For project parties that intend to participate in the Hong Kong stablecoin market as a licensed entity, the Regulations provide a clear framework and path for compliant operations. They only need to assess their own capital and have a clear understanding of the difficulty and ongoing expenditure of license applications and subsequent compliance maintenance.

For most project parties who do not intend to apply for a license directly but want to participate in the stablecoin ecosystem, cooperating with institutions that have obtained or are applying for a license is an ideal way to enter the market and expand digital financial business. This type of cooperation can cover multiple levels, such as providing technical support, custody services, payment integration solutions, cross-border clearing capabilities, or co-building compliant wallets and transaction interfaces as an ecological partner. In particular, companies in the fields of payment, Web3 infrastructure, cross-border e-commerce, and compliant custody can ensure the compliance of their own businesses through in-depth collaboration with licensed institutions, while quickly entering the regulatory-approved stablecoin circulation system.

The Regulations stipulate that licensed institutions must disclose license information in both official and public channels, so it is easier for project parties to identify real licensees at this point. However, when choosing a trustworthy stablecoin licensed institution as a partner, one should not only be satisfied with the superficial condition that the other party has a license, but more importantly, comprehensively evaluate its business strength, compliance level and cooperation potential.

For example, the security and transparency of the licensees reserve assets are crucial. The ideal partner should have 1:1 full asset coverage and regularly publish reports audited by a third party to clarify the reserve currencies, custodians, and risk status. At the same time, whether there is a stable redemption mechanism is also one of the criteria. The project party should pay attention to whether it supports barrier-free redemption at any time to avoid liquidity risks in the future. Finally, the project party should also examine the actual influence of the institution in the market, such as whether it has been connected to mainstream wallets, exchanges or payment channels, community reputation, and other factors.

2. What is the significance of the Stablecoin Bill?

1. Policy significance

In the traditional financial system, the right to issue currency, also known as the right to mint coins, has always been controlled by the state. However, in the era of digital currency, this power is facing challenges. Hong Kong has established a stablecoin regulatory system through local laws, which is essentially seizing the legal status of digital minting rights, especially the stablecoin anchored by the Hong Kong dollar.

2. What it means to the Web3 world

Although the Hong Kong government has designated stablecoins as payment tools, in the context of Web3, stablecoins are still the key link between on-chain and off-chain, traditional assets and crypto assets. The institutionalization of stablecoins is the key to promoting the end-to-end closed loop of RWA. In this system, perhaps the role of stablecoins is far more than payment and settlement: whether it can run through the entire process of asset generation, subscription, holding, circulation and exchange in the future is a question worth looking forward to. With the establishment of a compliance framework, stablecoins are expected to become the native funding layer of RWA, reducing dependence on the traditional legal currency system and improving on-chain financial efficiency and transparency.

In terms of usage scenarios, international trade remains the largest potential market for stablecoins. Real problems such as cross-border settlement efficiency, foreign exchange costs, and sanctions evasion are constantly driving companies interest in on-chain stablecoin tools. According to statistics, stablecoins achieved substantial growth in 2024, with remittances exceeding the total of Visa and Mastercard. Compliance brings scale and institutional participation, and is the starting point for the projects true commercialization.

For native Web3 projects, the biggest impact is not regulation, but inclusion in channels that can access larger-scale assets. In the current context of increasingly scarce in-chain liquidity, obtaining a compliant identity means being able to connect with institutional investors, RWA assets, and traditional financial systems, and participate in higher-quality and more explosive liquidity releases.

3. Is it possible for the RMB stablecoin to be implemented?

Does the implementation of stablecoin regulation in Hong Kong open up policy imagination space for RMB stablecoin? Although RMB stablecoin is still a sensitive topic at present, its long-term potential cannot be ignored. Crypto Salad believes that if suitable RWA targets (such as energy, minerals, overseas bonds, etc.) can be found in the future to provide a stable circulation carrier for RMB stablecoin, its use logic will be more established. Hong Kong may become a policy buffer zone between RMB stablecoin and the international Web3 market.

Although Hong Kong has taken the lead in legislation, stablecoins still face highly complex regulatory challenges in the mainland market. Due to concerns about financial sanctions and dependence on the US dollar system, many companies have a practical need to use non-US dollar settlement tools. But for regulators, liberalizing stablecoins means facing:

Controllability of capital flows and cross-border settlements;
交換 controls and pressure on financial stability;
Control over data and financial information security issues;
How to interact and misalign with the existing digital RMB system;
……

Therefore, Crypto Salad believes that it is unlikely that the mainland will replicate Hong Kong’s approach in the short term, but Hong Kong’s “experimental field” experience may provide a blueprint for larger-scale digital financial strategic exploration in the future.

三、結論

With the official implementation of the Ordinance, Hong Kong has undoubtedly taken a key step in the global stablecoin regulatory competition. This is not only an innovation of local financial policies, but also a strategic exploration of the entire Web3 ecosystem, RWA and even the global monetary landscape. Although in this article, Crypto Salad has explained the key provisions of the Ordinance in detail, we believe that what is really worth paying attention to is not how a certain article is stipulated, but to see that a new institutional space is opening up. At a time when the global digital currency policy has not yet been unified, Hong Kong has given a clear roadmap: to legalize, systematize and industrialize stablecoins. This is both a challenge and an opportunity for the entire Web3 world.

This article only represents the personal views of the author and does not constitute legal advice or legal opinion on specific matters.

This article is sourced from the internet: Web3 Lawyers Full Interpretation of the Stablecoin Ordinance: From Regulatory Framework to 市場 Significance, How Did Hong Kong Do It?

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