This article is reprinted with permission from Mankun Blockchain Law, author: Lawyer Shao Jiadian, copyright belongs to the original author.
In the past two months, the debate over whether Hong Kong can "continue to exchange USDT on the street" has become a daily topic in the industry: the Legislative Council passed the "Stablecoin Ordinance" in May, the HKMA will regulate fiat currencies with reference to stablecoins (fiat-referenced stablecoins), and the ordinance will take effect on August 1; subsequently, discussions in the market about whether OTC (over-the-counter trading, exchange shops) can continue to conduct USDT/USDC transactions in a "store listing/in-person transaction" manner have become increasingly heated.
However, the debate was "concluded" by the regulatory authority in a written response from the Legislative Council on September 10— the Financial Services and the Treasury Bureau clearly stated in the response (excerpt from the original text): "The 'Stablecoin Ordinance' will be implemented on August 1, 2025… Currently, only 'authorized providers' can offer specified stablecoins… Virtual asset OTC institutions are currently not classified as 'authorized providers' under the 'Ordinance', and therefore cannot offer specified stablecoins to retail or professional investors." (Original text).
In other words, the regulatory stance has shifted from "discussing boundaries" to "clarifying positions": if you sell/buy specified stablecoins to the public in your own name, with store quotes or promises of transactions, then you are not on the legally permitted list. This means that the regulation aims to control the selling of USDT, rather than applying a blanket ban on all stablecoin-related businesses.
Below is the original text of the Legislative Council bulletin:
Before further analysis and conclusions regarding the above bulletin, we need to clarify the following legal keywords:
"Offer" = the act of selling. The legal definition of "offer" is: in the course of business, making an offer to the other party to "obtain a specified stablecoin from you"; it targets the act of giving coins to others, not receiving coins from others. Therefore, the action of "only buying and not selling" does not equate to "offer".
"Regulated stablecoins": refers to stablecoins regulated by Hong Kong's "Stablecoin Ordinance", but as of September 10, no issuers have been licensed, meaning that there are currently no "regulated stablecoins" available for retail sale.
"Non-regulated stablecoins": Any stablecoins not issued by licensed issuers under the "Stablecoin Ordinance", or not within the specified/regulatory scope, are collectively referred to as "non-regulated stablecoins". In other words, before "regulated stablecoins" are available, all circulating stablecoins in the market are legally considered "non-regulated stablecoins", including USDT and USDC.
Authorized providers (five categories): licensed stablecoin issuers, virtual asset service providers licensed by the SFC, individuals holding stored value payment tool licenses, corporations licensed by the SFC to conduct Type 1 regulated activities, and recognized institutions. Whether they can sell depends on who they are selling to (retail/professional) and what they are selling (regulated/non-regulated).
Note: The ordinance and this response "target" the seller's offer; "buying/receiving coins" is not directly classified as "offer", but must still comply with AML/KYC, payment and custody intermediary, and other frameworks.
As of September 10, 2025 (no regulated stablecoins yet).
Two notes:
"Buying" refers to receiving coins from customers, not providing stablecoins externally; if there are elements such as listing a selling price, promising a transaction, or giving coins to the other party in one's own name, it will be deemed as "offer".
Even if "buying is allowed", you still need to adhere to anti-money laundering/sanctions screening, payment/SVF/exchange, and other existing rules; additionally, specialized licensing for VA brokerage/custody is on the way, and future requirements for "client transfers/matching/temporary custody" will be raised.
Looking back at the debates over the past two months, many misunderstandings have been stuck on "does passive matching count as selling". The written response clarifies the stance: OTC does not belong to authorized providers, and therefore cannot "offer" specified stablecoins to retail or professional investors (regardless of whether they are regulated stablecoins);
It also emphasizes that currently no issuers have been licensed. In plain language: you cannot sell U externally; you can only receive U without "providing" coins to others, and the regulations do not directly target you. This also explains why traditional OTCs that "buy and sell" feel a significant "tightening", while "only receiving U → fiat settlement" acquiring/U card businesses can still operate within compliance boundaries.
- Traditional OTC (buying and selling)
Bad news confirmed. As long as you sell U externally—even if you consider it "passive"—once there are elements such as quoting prices, promising transactions, or giving coins to customers in your own name, it triggers the "offer" red line. More realistically: even if you want to "go platform brokerage", the SFC's intermediary stance requires licensed platforms and prohibits self-custody, and "selling regulated stablecoins to retail" currently has no targets available for sale. The old model is unsustainable, which is the clearest signal after this response.
- U card and "only receiving U, fiat settlement" crypto acquiring institutions
In the short term, they are the beneficiaries. What you do is receive U (buy) → hand over to a regulated party to exchange for fiat → settle fiat with merchants, without the "providing stablecoins to customers" hand. They are not within the scope of this response's crackdown. But do not overlook three barriers: AML/KYC/on-chain screening must be strict; payment/SVF/exchange and other existing frameworks must still be adhered to; and after the VA brokerage/custody specialized license is implemented, the thresholds for client transfers/matching/temporary custody will become higher. In other words, just because you are not targeted today does not mean you won't be regulated tomorrow.
- Institutions wanting to "obtain a license"
Long-term benefits but with very high thresholds. The gateway for stablecoin issuance and offers lies in HKMA licensing; "intermediary/brokerage/custody" is moving towards independent licensing by the SFC. This dual-track system means that stablecoin offers are still subject to special legal constraints; those with capital, banking channels, and risk control systems will be able to seize positions in the next round; a more pragmatic route for small and medium-sized institutions is to stabilize the "receiving U → fiat" process and wait for new licenses to clear uncertainties.
Because it turns ambiguous issues into factual judgments: whether you are actually "selling" or "receiving". The law is very straightforward about "offers", and the response also specifically names the non-authorized status of OTC and the reality of "no licenses issued". The industry's emotional debate ends here, and what remains is compliance engineering: completely severing the appearance of "selling" from products, language, and settlement chains; evidencing and verifying the chain of receiving U → regulated party exchanging for fiat → merchants receiving fiat, and reserving interfaces for the upcoming VA brokerage/custody specialized licenses.
This written response does not close the door but firmly nails the door frame. The regulation aims to control the "selling" hand: offers to provide stablecoins to others must return to the authorized system; while the "receiving" hand—from receiving stablecoins from others, then exchanging them into fiat through compliant channels and settling—has not been directly prohibited under the current stance. The real dividing line is not whether you call yourself OTC or payment, but whether your business facts will be recognized as a seller's offer. This requires every institution to align their product interfaces, business language, settlement paths, and contract terms one by one, making the distinction between "receiving" and "selling" clear in evidence.
At the same time, do not forget the time dimension. Today's stance resolves the question of "who can sell", but the VA brokerage/custody specialized licenses are on the way, and future requirements for "client transfers, matching, and temporary custody" will only become clearer and stricter. Rather than getting entangled in the last inch of the gray area, it is better to quickly shape the business into a form that can be verified by regulators: hand over the rights and responsibilities of "selling" to those who can sell, and refine the channels for "receiving" to withstand inquiries. For institutions that still want to remain in the Hong Kong market long-term, this is not a stylistic choice but a survival strategy.
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