The passage of the "Stablecoin Regulation Draft" in Hong Kong has far-reaching positive impacts on the virtual currency industry in Hong Kong and mainland China.
Written by: Crypto Salad
The Legislative Council of the Hong Kong Special Administrative Region passed the "Stablecoin Regulation Draft" on May 21, 2025, marking Hong Kong as the first jurisdiction in the world to establish a comprehensive regulatory system for fiat-backed stablecoins. This legislative action not only provides a clear legal framework for Hong Kong's virtual asset industry but also brings profound positive impacts on the development of the virtual currency industry in Hong Kong and mainland China by balancing financial innovation with risk prevention. Lawyer Liu (web3_lawyer) analyzes the positive significance of the bill's passage from the perspectives of Hong Kong and mainland China, combining policy background, industry impact, and future trends.
I. Positive Impact on Hong Kong
(1) Strengthening Hong Kong's Position as a Global Digital Asset Center
As an international financial center, Hong Kong has been making continuous efforts in the virtual asset sector in recent years. The passage of the "Stablecoin Regulation Draft" further consolidates Hong Kong's leadership position in the global digital asset market. The bill clarifies the regulatory requirements for stablecoin issuers, including a registration capital threshold of HKD 25 million, a 1:1 reserve asset backing for issuance, and mandatory unconditional redemption rights. These strict yet clear regulatory standards provide a transparent compliance environment for the stablecoin market, helping to attract global investors and businesses to choose Hong Kong as the operational center for stablecoin activities.
Additionally, the Hong Kong Monetary Authority plans to quickly release regulatory guidelines following the bill's passage and open license applications by the end of 2025. This will encourage enterprises, including Standard Chartered Hong Kong and ANX Group, to actively participate, accelerating the development and application of the Hong Kong dollar stablecoin. The launch of the Hong Kong dollar stablecoin will not only enhance Hong Kong's competitiveness in cross-border payments but also promote the development of the Web3 ecosystem, injecting new vitality into Hong Kong's digital economy. For example, the Hong Kong dollar stablecoin can be used for efficient, low-cost cross-border trade settlements, further solidifying Hong Kong's position as a financial hub in Asia.
(2) Promoting Financial Innovation and Technological Development
The passage of the "Stablecoin Regulation Draft" indicates that the Hong Kong government views stablecoins as an important component of digital financial infrastructure rather than a marginal technology. The bill provides a clear compliance pathway for stablecoin issuers, encouraging enterprises to innovate within the regulatory framework. For instance, JD Group has entered the "sandbox" testing phase for stablecoins in Hong Kong, demonstrating corporate confidence in the Hong Kong market. This "regulatory sandbox" mechanism allows companies to test innovative products in a controlled environment, reducing compliance costs for startups while providing space for technological iteration.
As a core component of decentralized finance (DeFi), the legalization of stablecoins will further promote the development of areas such as Web3, NFTs, and the metaverse. Since 2022, the Hong Kong government has begun laying out virtual asset regulations, conducted public consultations in 2023, and launched a regulatory sandbox in 2024, showing long-term support for the Web3 ecosystem. The passage of the bill will further stimulate the application of blockchain technology in payments, settlements, and supply chain finance, creating a vibrant digital asset ecosystem in Hong Kong.
(3) Enhancing Market Confidence and Investor Protection
The virtual asset industry has faced a trust crisis due to past events (such as the FTX collapse). By establishing a comprehensive regulatory system for stablecoins, Hong Kong emphasizes reserve asset management, liquidity, and anti-money laundering (AML) requirements, effectively reducing market risks. These measures ensure the sustainability of stablecoin issuers' business models while providing higher security for investors. For example, the mandatory 1:1 reserve asset requirement and unconditional redemption rights can effectively prevent the risk of stablecoin decoupling, enhancing market trust in stablecoins.
Moreover, Hong Kong's regulatory framework seeks a balance between innovation and protection, demonstrating an open and compatible attitude. This balance not only attracts the attention of global crypto enterprises but also provides local retail investors with safer investment channels. For instance, ZA Bank has taken the lead in launching virtual asset trading services, supporting Bitcoin and Ethereum trading, and may further expand to stablecoin trading in the future. This pioneering demonstration effect will encourage more financial institutions to enter the virtual asset market, expanding Hong Kong's investor base.
(4) Promoting Cross-Border Payments and Financial Connectivity
Stablecoins have advantages of low cost and high efficiency in cross-border payments, and Hong Kong's stablecoin legislation lays the foundation for the widespread application of the Hong Kong dollar stablecoin. The launch of the Hong Kong dollar stablecoin will optimize financial connectivity between Hong Kong and other regions in Asia, especially in the context of the "Belt and Road" initiative and the development of the Guangdong-Hong Kong-Macao Greater Bay Area. For example, the Hong Kong dollar stablecoin can be used for cross-border e-commerce, trade settlements, and supply chain finance, reducing transaction costs and improving settlement efficiency. This will not only help Hong Kong solidify its position as a global trade center but also provide local enterprises with more digital financial tools.
II. Positive Impact on Mainland China
(1) Providing Regulatory Experience Reference for Mainland China
Mainland China has a relatively strict regulatory attitude towards virtual currencies, prohibiting cryptocurrency business transactions and ICOs, but maintaining an open attitude towards blockchain technology. The passage of Hong Kong's "Stablecoin Regulation Draft" provides a regulatory model that can be referenced by mainland China. Hong Kong's regulatory framework emphasizes a balance between compliance, risk prevention, and financial innovation, which aligns with mainland China's policy goals of promoting the application of blockchain technology in the financial sector (such as digital RMB).
For example, Hong Kong's "regulatory sandbox" mechanism provides a testing environment for stablecoin issuance, which may inspire mainland China to explore similar pilot mechanisms in specific areas (such as central bank digital currency CBDC or supply chain finance). As a bridge between mainland China and international markets, Hong Kong's successful experience may promote the gradual relaxation of regulatory restrictions on stablecoins and other virtual assets in mainland China in the future, especially in the area of stablecoins pegged to the Hong Kong dollar or RMB.
(2) Promoting the Internationalization of the RMB
Hong Kong's stablecoin legislation provides a testing ground for non-USD stablecoins (such as stablecoins pegged to the Hong Kong dollar or RMB). Although the current regulatory focus in Hong Kong is primarily on the Hong Kong dollar stablecoin, its open regulatory attitude provides possibilities for exploring RMB stablecoins. As an offshore center for the RMB, Hong Kong has a mature financial infrastructure and an internationalized market environment, making it suitable as a testing ground for RMB stablecoins. If RMB stablecoins succeed in Hong Kong, it will further promote the use of RMB in global payments and settlements, aiding the internationalization of the RMB.
For example, Hong Kong's stablecoin regulatory framework may provide compliance channels for mainland enterprises to issue RMB-pegged stablecoins through Hong Kong for cross-border trade and investment. This model can not only enhance the international acceptance of the RMB but also provide mainland enterprises with new financing and payment tools, strengthening their competitiveness in the global market.
(3) Promoting Collaborative Development of Financial Technology in the Guangdong-Hong Kong-Macao Greater Bay Area
The Guangdong-Hong Kong-Macao Greater Bay Area is an important region for mainland China to promote the application of financial technology and blockchain technology. Hong Kong's stablecoin legislation provides new opportunities for collaborative development of financial technology in the Greater Bay Area. For example, the Hong Kong dollar stablecoin can complement the digital RMB to jointly serve the cross-border payment, trade financing, and supply chain finance needs of the Greater Bay Area. Hong Kong's regulatory experience and mature financial market can provide compliance guidance for Greater Bay Area enterprises, attracting more mainland technology companies to enter international markets through Hong Kong.
Additionally, Hong Kong's virtual asset trading platforms and stablecoin issuers may collaborate with mainland enterprises to develop blockchain-based financial products. For instance, stablecoins can be used in supply chain finance platforms in the Greater Bay Area to address the financing difficulties faced by small and medium-sized enterprises. This cross-regional cooperation will promote the integration and development of the financial technology ecosystem in the Greater Bay Area.
(4) Indirectly Stimulating the Application of Blockchain Technology in Mainland China
Although mainland China maintains a cautious attitude towards cryptocurrency trading, blockchain technology has been widely applied in areas such as supply chain finance, cross-border payments, and digital identity verification. Hong Kong's stablecoin legislation provides a successful case for the commercial application of blockchain technology, which may indirectly stimulate mainland enterprises to accelerate the research and application of blockchain technology within a compliance framework. For example, Hong Kong's stablecoin "sandbox" testing experience can provide technical references for mainland enterprises, promoting the implementation of blockchain in the financial technology sector.
III. Future Trend Outlook
The passage of Hong Kong's "Stablecoin Regulation Draft" marks a new stage in global stablecoin regulation. In the future, Hong Kong may become a global testing ground for non-USD stablecoins, attracting more international enterprises to enter its market. At the same time, Hong Kong's regulatory model may provide references for other countries and regions, promoting coordination and development of global stablecoin regulation.
For mainland China, Hong Kong's successful experience may prompt regulatory agencies to gradually relax restrictions on virtual assets in the future, especially in areas related to the internationalization of the RMB. Mainland enterprises can participate in the global digital asset market through Hong Kong's compliance channels, enhancing their international competitiveness. Furthermore, financial technology cooperation between Hong Kong and mainland China will further deepen within the framework of the Guangdong-Hong Kong-Macao Greater Bay Area, forming a model of regional collaborative development.
IV. Final Thoughts
The passage of Hong Kong's "Stablecoin Regulation Draft" has far-reaching positive impacts on the virtual currency industry in Hong Kong and mainland China. For Hong Kong, the bill consolidates its position as a global digital asset center, promotes financial innovation, investor protection, and the development of cross-border payments. For mainland China, Hong Kong's regulatory experience provides a reference, promoting the internationalization of the RMB, collaborative development of financial technology in the Guangdong-Hong Kong-Macao Greater Bay Area, and indirectly stimulating the application of blockchain technology. In the future, as the Hong Kong stablecoin market matures and further cooperation with mainland China develops, both sides will occupy a more important position in the global digital finance field, injecting new momentum into regional economic development.
This article only represents the author's personal views and does not constitute legal advice or opinions on specific matters.
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