Hong Kong's Stablecoin Ordinance: A New Era Begins
Hong Kong officially enforces its Stablecoin Ordinance today, August 1, 2025. This regulatory change transforms stablecoins into a key part of programmable financial infrastructure, boosting Hong Kong's position in compliant digital finance.
Regulatory Shifts and Market Impact
The U.S. GENIUS Act legitimizes dollar-backed stablecoins, reinforcing the dollar's dominance through Treasury reserves. Tether, for example, holds nearly $100 billion in U.S. Treasury bills. This raises concerns about monetary sovereignty in Europe and Asia.
Hong Kong’s proactive framework, enacted in May, provides an alternative, leveraging its offshore yuan market. This addresses geopolitical tensions in digital currency control.
What’s New?
The new system replaces Hong Kong’s “white list and sandbox” model with a licensing system managed by the HKMA. Applicants need to show 100% liquid asset backing and strong governance.
- Minimum paid-up capital: HK$25 million
- Local corporate presence required
- Complete KYC user verification
- Transparent audit trails
These standards aim to ensure market stability by allowing only mature operators to participate.
Industry Response
Over 50 institutions are reportedly preparing stablecoin license applications. The HKMA is prioritizing quality over quantity, with first approvals expected by early 2026.
- Standard Chartered has partnered with Animoca Brands and HKT to issue HKD-backed stablecoins.
- JD.com’s blockchain arm has registered “JCOIN” and “JOYCOIN” for cross-border payments.
Geopolitical Consequences
Stablecoins are evolving into essential infrastructure for trade finance, enabling real-world asset tokenization and programmable money systems.
JD.com CEO Richard Liu stated that stablecoin licenses could reduce global cross-border payment costs by 90% and improve efficiency to within 10 seconds.
Strategic Positioning
Hong Kong’s approach supports both single and basket currency models, creating opportunities for offshore RMB (CNH) stablecoins. This is seen as a strategic move for Renminbi internationalization.
Analysts suggest a dual-rail architecture could connect Eastern and Western financial systems, challenging the dollar's dominance.
Looking Ahead
China established offshore renminbi markets in 2003 to promote its currency internationally. By 2024, approximately 30% of Mainland’s trade was settled in RMB, up from 15% in 2020.
China’s Blockchain Service Network supports alternative systems, potentially expanding through the Belt and Road Initiative.
Potential Hurdles
Regulatory acceptance is crucial. Currently, USD accounts for 54% of trade settlement and 88% of Forex transactions, compared to CNY's 4% and 7%, respectively.
Despite efforts, post-2009 financing operations remained largely dollar-denominated, and capital controls have limited arbitrage flows.
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