Hong Kong’s financial landscape undergoes a dramatic transformation as Bank of China (Hong Kong) prepares to apply for a stablecoin issuer license. This move signals a major shift in the city’s approach to digital assets. Consequently, the banking giant aims to lead the first wave of regulated stablecoin issuers under Hong Kong’s groundbreaking new framework.
Hong Kong Stablecoin Regulatory Framework Takes Shape
Hong Kong implemented the Stablecoins Ordinance on August 1, 2025. This legislation establishes comprehensive rules for fiat-referenced stablecoins. The Hong Kong Monetary Authority now oversees licensing requirements. Significantly, the framework mandates strict capital and reserve standards.
Key Regulatory Requirements
The new Hong Kong stablecoin rules impose several critical conditions:
- Minimum capital of HK$25 million for all issuers
- 100% asset backing with high-quality liquid assets
- Exclusion of central bank digital currencies and bank deposits
- Cold storage requirements for 98% of client assets
Bank of China’s Strategic Move
Bank of China (Hong Kong) reportedly initiated license application procedures. Sources indicate the bank seeks inclusion in the first approval batch. Applications must submit documentation by September 2025 deadline. However, neither the bank nor HKMA has officially confirmed these developments.
Market Impact and Industry Response
The stringent Hong Kong stablecoin regulations already affect market participants. Major exchanges like BitMart withdrew virtual asset license applications. This trend highlights the industry’s compliance challenges. Furthermore, the high standards may reshape the digital finance landscape.
Cross-Border RMB Internationalization
Hong Kong’s stablecoin framework supports multiple currencies. The system facilitates Hong Kong dollar, U.S. dollar, and offshore renminbi transactions. This development potentially reduces SWIFT system dependency. Emerging markets could benefit from faster, cheaper financial services.
Fraud Prevention Challenges
Despite regulatory advances, stablecoin fraud persists in Hong Kong. Recent cases involved HK$3 million schemes targeting elderly victims. The new ordinance prohibits unlicensed stablecoin issuance. However, fraudsters exploit regulatory gaps in fiat transactions.
Future Outlook and Global Implications
Hong Kong positions itself as a global digital finance hub. The city’s stablecoin approach could set international standards. Multicurrency support enhances cross-border transaction efficiency. This development may accelerate RMB internationalization efforts.
Frequently Asked Questions
What is the minimum capital requirement for Hong Kong stablecoin issuers?
Issuers must maintain minimum capital of HK$25 million under the new regulatory framework.
When is the application deadline for the first license batch?
The first round of applications must submit documentation by end of September 2025.
Which assets qualify for stablecoin backing in Hong Kong?
The framework requires high-quality liquid assets like short-term government bonds, excluding CBDCs and bank deposits.
How does Hong Kong’s approach differ from other jurisdictions?
Hong Kong mandates stricter capital requirements, 100% asset backing, and exclusive focus on fiat-pegged stablecoins.
What currencies does the framework support?
The system accommodates Hong Kong dollar, U.S. dollar, and offshore renminbi stablecoins.
How does this affect RMB internationalization?
The framework facilitates cross-border RMB transactions, potentially reducing traditional system reliance and enhancing China’s currency globalization.
