Interpretation of Hong Kong Stablecoin New Regulations and Retail Investor Guide

On August 1, 2025, Hong Kong officially implemented the "Stablecoin Ordinance," becoming the first region in the world to establish a complete regulatory framework for fiat stablecoins. This article will analyze the regulatory policies of the Hong Kong Monetary Authority (HKMA), provide guidance for retail investors on compliant holdings of stablecoins, and compare the regulatory differences between Hong Kong, Singapore, and the United States, exploring market prospects and challenges.

Core Content of Hong Kong's Stablecoin Regulation

The Hong Kong Monetary Authority has established a licensing system for fiat stablecoins through the "Stablecoin Ordinance," seeking a balance between innovation and risk. Institutions that issue fiat stablecoins or claim to be pegged to the Hong Kong dollar in Hong Kong must apply for a license from the Monetary Authority and meet strict entry requirements. These requirements include a robust risk management system, anti-money laundering (AML) and counter-terrorism financing (CFT) measures, as well as reliable technological security capabilities. It is expected that initially only a few banks or fintech companies will be able to obtain a license.

The "stablecoin sandbox" program launched by the Monetary Authority supports testing for cross-border trade and Web3 applications, with some well-known institutions among the first participants. Issuers must ensure that reserve assets are sufficient and held in regulated custodians, while regularly publishing audit reports. Stablecoins are positioned as payment tools, primarily used for cross-border trade in the initial stage to reduce retail investor risk. The new regulations also set a transition period to give market participants time to adjust their operations to ensure compliance.

For retail investors, the regulatory measures in Hong Kong have increased market transparency and security, enabling retail investors to participate in the digital economy through compliant stablecoins, but they need to choose licensed products.

How can retail investors legally hold stablecoins in Hong Kong?

Under the new regulations in Hong Kong, retail investors must follow the steps below to hold stablecoins in compliance:

1. Choose licensed stablecoins: Prioritize stablecoins authorized by the Monetary Authority, as these stablecoins are typically pegged to the Hong Kong Dollar or other major fiat currencies. You can check the list of issuers through the Monetary Authority's official website or compliant exchanges.

2. Use compliant platforms: Trade through virtual asset trading platforms (VASP) regulated by the Monetary Authority to ensure the platform meets KYC and AML requirements.

3. Focus on use and disclosure: Understand the specific uses of stablecoins (such as cross-border payments) and the issuer's reserve audit reports to ensure value stability.

4. Be cautious of cross-border risks: Pay attention to the technical and compliance challenges that may arise from differences in cross-chain technology or cross-border regulation.

Special reminder: Avoid investing in non-compliant stablecoins that claim to offer "high returns" and prioritize issuers that are transparent and regulated.

Comparison of Stablecoin Regulations in Hong Kong, Singapore, and the United States

Hong Kong: A Pioneer in Comprehensive Regulatory Frameworks

The Hong Kong Monetary Authority's regulatory measures are strict, emphasizing reserve transparency and AML compliance. It supports stablecoins pegged to multiple currencies (such as those issued on Ethereum and Solana networks), aimed at promoting the internationalization of the Renminbi and cross-border trade. This policy has attracted banks and tech giants to apply for licenses, which is expected to help Hong Kong become a digital financial hub in Asia.

Singapore: Balancing Flexibility and Prudence

The Monetary Authority of Singapore (MAS) launched a stablecoin framework in 2023, focusing on regulating stablecoins pegged to the Singapore dollar, requiring issuers to hold sufficient fiat currency reserves. The policy is relatively flexible, attracting several global issuing institutions, and testing payment and DeFi applications through the "Project Orchid" initiative, with high retail investor participation.

US: Mature market but fragmented regulation

The United States has not yet introduced a unified stablecoin legislation, but proposals such as the "GENIUS Act" are expected to make progress by 2025. Regulators require issuers to register as money service businesses (MSB) and disclose reserve asset conditions. The largest stablecoins in the market have already been established, but conflicts between state and federal regulation have increased uncertainty.

Insights for retail investors: Hong Kong has strict regulations, high safety but limited choices; Singapore has flexible policies suitable for diversified investments; the US market is mature but attention must be paid to regulatory risks.

Opportunities and Challenges for Retail Investors in Stablecoins

Opportunities:

• Compliant stablecoins in Hong Kong provide retail investors with a secure investment option.
• The global stablecoin market is growing rapidly, and Hong Kong may experience similar expansion.
• Multi-chain technology is expected to reduce transaction costs and improve efficiency.

Challenge:

• The high thresholds in Hong Kong may limit the number of issuers, resulting in restricted choices for retail investors.
• Cross-border regulatory differences have increased the complexity of compliance.
• Technical vulnerabilities or poor reserve management may cause value fluctuations.

Conclusion: Retail Investors' Strategies for New Regulations

The Hong Kong "Stablecoin Regulation" provides retail investors with a secure and regulated investment environment, but also requires a higher level of compliance awareness. Retail investors should choose stablecoins authorized by the Monetary Authority, trade through regulated platforms, and pay attention to the use and reserve transparency of stablecoins. Compared to the flexibility of Singapore and the mature market of the United States, Hong Kong places more emphasis on financial stability and the internationalization of the Renminbi, making it suitable for conservative investors.

Action suggestions:

• Short term: Pay attention to the list of the first batch of licensed issuers and choose compliant stablecoins.
• Mid-term: Participate in cross-border trade or Web3 scenario applications
• Long-term: Continuously monitor regulatory dynamics in Hong Kong, Singapore, and the United States, and optimize the investment portfolio.

Investing involves risks, and it is recommended to consult a professional advisor for opinions. This article is for reference only and does not constitute investment advice.