Hong Kong to Criminalize Unlicensed Stablecoin Promotions Starting August 1

Starting August 1, 2025, Hong Kong will enforce the Stablecoins Ordinance, criminalizing the promotion or offering of unlicensed fiat-referenced stablecoins (FRS) to retail investors. The new law, passed by the Legislative Council on May 21, 2025, introduces strict penalties, including fines of up to HK$50,000 (approximately US$6,300) and imprisonment for up to six months for individuals or entities found violating the regulations.

The Hong Kong Monetary Authority (HKMA), the city’s central bank, will oversee the licensing regime for fiat-referenced stablecoin issuers, aiming to enhance investor protection and curb market speculation. HKMA Chief Executive Eddie Yue emphasized the need for caution, warning the public to avoid unlicensed offerings to prevent inadvertently breaking the law.

“Recent promotions have bordered on market manipulation or fraud,”

Yue stated, highlighting the ordinance’s goal to ensure credibility and stability in the stablecoin sector.

Under the new rules, only HKMA-licensed entities can offer or promote fiat-referenced stablecoins to the public in Hong Kong. Stablecoins must be fully backed by high-quality, liquid reserves, such as cash, bank deposits, or government bonds, held in trust and separated from company assets to protect against insolvency. The ordinance also imposes strict anti-money laundering and counter-terrorist financing requirements.

The HKMA will initially grant fewer than 10 licenses, with over 40 major financial and tech firms, including Ant Group and JD.com, competing for approval. Unlicensed issuers will be restricted to offering stablecoins only to professional investors, and transitional arrangements are in place to help existing operations comply.

The move aligns Hong Kong with global trends in stablecoin regulation, mirroring frameworks like the EU’s Markets in Crypto-Assets Regulation (MiCA). The ordinance positions Hong Kong as a leader in digital asset regulation, balancing innovation with robust oversight to maintain its reputation as a global financial hub.

For more details on licensing, the HKMA will release an explanatory note next week outlining the application process. Market participants are urged to collaborate with licensed issuers to ensure compliance.