According to the latest announcement from the Hong Kong Special Administrative Region government, the "Stablecoin Regulation" will officially take effect on August 1, 2025, marking another significant breakthrough for Hong Kong in the global digital asset regulatory landscape. Recently, Hong Kong's Financial Secretary Paul Chan and Secretary for Financial Services and the Treasury Christopher Hui reiterated the strategic value of stablecoins on different occasions, emphasizing that they are not only at the forefront of digital asset development but also important tools for enhancing financial efficiency and supporting the real economy. Paul Chan pointed out that the efficient circulation of stablecoins in a blockchain environment can optimize capital flow and bring revolutionary changes to cross-border payments and capital markets; Christopher Hui clarified that stablecoins should not be used as speculative or profit-making tools, and the government will prevent financial risks through strict regulatory requirements, including sufficient capital reserves and real-time redemption mechanisms.

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1. The Potential of Stablecoins: A "Catalyst" for Financial Efficiency

Paul Chan noted in his blog "A New Era in Asia" that stablecoins, as one of the core applications of blockchain technology, can significantly reduce the cost and time of cross-border payments, addressing the pain points of the traditional financial system characterized by "slow speed and high costs." He emphasized that the on-chain circulation of stablecoins not only optimizes capital liquidity but also provides more efficient financing channels for the real economy, such as supply chain finance and loans for small and medium-sized enterprises. Christopher Hui further explained in a media interview on the same day that the low volatility of stablecoins makes them ideal payment tools in the digital economy, especially with great potential in B2B cross-border trade and retail scenarios.

Hong Kong's stance aligns closely with global trends. By 2025, the global stablecoin market size has surpassed $230 billion, with USDT and USDC accounting for 87% of the market share. Hong Kong aims to leverage regulatory innovation to develop local stablecoins (such as HKD-pegged stablecoins) into regional payment tools, helping businesses tackle global trade barriers.

2. The Core Framework of the "Stablecoin Regulation": Balancing Compliance and Innovation

The "Stablecoin Regulation" will be enforced by the Hong Kong Monetary Authority (HKMA), with core contents including:

• Licensing System: Any entity issuing or providing fiat-pegged stablecoins (FRS) to the public in Hong Kong must apply for a license from the HKMA.
• Capital and Reserve Requirements: Stablecoins must be 100% backed by cash or highly liquid assets such as short-term government bonds, with reserve assets required to match the face value of circulating stablecoins on a 1:1 basis, stored in authorized banks in Hong Kong or custodial institutions recognized by the HKMA.
• Redemption Mechanism: Issuers must provide a real-time redemption mechanism, ensuring that holders can redeem at face value without incurring additional fees.
• Anti-Money Laundering and Transparency: Issuers must comply with strict AML/CTF requirements, undergo regular audits, and publicly disclose reserve asset information.

Christopher Hui emphasized that stablecoins "are not tools for wealth generation or speculation," but rather payment means, and the regulatory design aims to "protect monetary sovereignty and prevent financial risks." HKMA Chief Executive Eddie Yue added that the regulation follows the principle of "same business, same risk, same rules," aligning with the EU's MiCA framework and the U.S. "GENIUS Act," while considering local characteristics.

3. Upgrading Hong Kong as a Digital Financial Hub

1. Enhancing financial efficiency and supporting the real economy

The "Stablecoin Regulation" positions stablecoins as "cost-effective alternatives" to traditional finance, especially in the field of cross-border payments.

2. Attracting global capital and innovation

After the regulation takes effect, companies like Ant Group and JD Coin Chain have already applied for stablecoin licenses, demonstrating industry giants' confidence in the Hong Kong market.

3. Supporting the internationalization of the Renminbi

Paul Chan mentioned that stablecoins could be pegged to offshore Renminbi (CNH) to promote the use of Renminbi in regional trade.

4. Potential Challenges

• High Compliance Threshold: The capital requirement of HKD 25 million and strict reserve management may limit the entry of startups. Decrypt quoted IDA co-founder Sean Lee stating that Hong Kong's regulatory "threshold is extremely high," which may lead global issuers to choose distribution rather than direct licensing.
• Technical and Operational Risks: Custodians need to defend against hacker attacks, and the Bybit incident in February 2025 highlighted the vulnerabilities of cold storage. Issuers also need to develop real-time redemption systems to ensure technical stability.
• Global Competitive Pressure: The implementation of the U.S. "GENIUS Act" and the EU's MiCA framework has intensified regulatory competition. Hong Kong needs to find a balance between attracting innovation and preventing risks to avoid overly stringent policies.

5. Future Outlook

In the future, Hong Kong plans to test new types of stablecoins (such as asset-backed stablecoins) through a "stablecoin issuer sandbox" and explore interoperability with the mainland's digital Renminbi (e-CNY). Christopher Hui stated that the government will continue to optimize the regulatory framework to support the application of stablecoins in scenarios such as supply chain finance and charitable donations, providing "substantive solutions" for businesses and citizens.

This article is for informational sharing only and does not constitute any investment advice for anyone.

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