Hong Kong is solidifying its position as a leading international financial center for virtual assets with the unveiling of new regulations for stablecoins and plans to promote tokenized bonds. These initiatives signal a clear commitment to fostering innovation while ensuring financial stability and investor protection.
In May 2025, Hong Kong's Legislative Council passed the Stablecoins Bill, establishing a licensing regime for fiat-referenced stablecoins (FRS). This comprehensive framework aims to regulate the issuance, offering, and marketing of stablecoins within the region. Under the new ordinance, any entity issuing FRS in Hong Kong, or issuing FRS that purports to maintain a stable value with reference to Hong Kong dollars, must obtain a license from the Hong Kong Monetary Authority (HKMA). This applies to both entities operating within Hong Kong and those operating outside of Hong Kong but targeting the Hong Kong market. The HKMA will oversee compliance with a range of requirements, including those related to anti-money laundering and counter-terrorist financing, risk management, disclosure, auditing, and fitness and propriety.
The regulatory regime prioritizes the protection of the general public and investors. Only licensed institutions can offer FRS in Hong Kong, and only FRS issued by licensed issuers can be offered to retail investors. The new rules also address advertising, with only advertisements of licensed FRS issuance being permitted, even during the six-month non-contravention period. The HKMA will conduct further consultations on the detailed regulatory requirements of the regime.
To qualify for a license, applicants must meet minimum criteria, including corporate status and financial resources. Licensees must be companies or authorized institutions incorporated outside Hong Kong and must possess adequate financial resources and liquid assets to meet their obligations. They must also have a minimum paid-up share capital of HKD 25 million (or equivalent in another currency) or other financial resources approved by the HKMA equivalent to or exceeding that amount.
The new regulations grant the HKMA broad enforcement powers to regulate stablecoin activities, allowing them to investigate potential offenses and contraventions of the ordinance. Transitional arrangements are in place to allow existing stablecoin operators a limited period to apply for a license and continue their activities while their application is processed.
In addition to the new stablecoin regulations, Hong Kong is actively promoting the adoption of tokenized bonds. The HKMA launched the Digital Bond Grant Scheme (DBGS) to subsidize companies issuing tokenized bonds. The DBGS will cover up to 50% of eligible expenses for digital bond issuances, up to a certain amount. The scheme aims to encourage broader adoption of tokenization technology in capital markets and foster the development of digital securities markets in Hong Kong. Each eligible issuer may receive subsidies for a maximum of two digital bond issuances. A full grant has a maximum cap of $321,184 (2.5 million Hong Kong dollars) and a half grant is also available.
Tokenized bonds record beneficial interests on a blockchain, a distributed digital ledger, instead of using traditional computerized book entries. The government hopes that this technology will generate efficiency gains, reduce costs, enhance transparency, and facilitate investor participation in the bond market. In February 2023, Hong Kong's government issued $100 million in tokenized green bonds under its Green Bond Programme.
