Reed Smith In-depth

  • Hong Kong currently has no specific mandatory licensing regime for stablecoin-related activities.
  • The regime has a target implementation date of 2023 or 2024.
  • Rather than a single licence, different targeted licences are envisaged for different activities.
  • The focus of regulation is activities relating to stablecoins purporting to reference one or more fiat currencies.
  • Fiat-referencing stablecoins will be required to be fully backed and redeemable at par.
  • In practice it appears unlikely algorithmic stablecoins will be licensed.
  • Licensees will be expected to meet requirements related to ownership, governance and management, financial resources, risk management, anti-money laundering, user protection, regular audits and disclosure.
  • Entities carrying on regulated activities with HKD-backed stablecoins will be regulated whether they operate in Hong Kong or elsewhere.
  • The Hong Kong authorities will coordinate with regulators of other jurisdictions, such as the Monetary Authority of Singapore, which itself proposed measures to regulate the issuance of stablecoins in October 2022.

Auteurs: Matthew Townsend Brett Hillis Jonathan T. Ammons Hagen Rooke Nicholas Tok (Resource Law LLC)


On 31 January 2023, the Hong Kong Monetary Authority (HKMA) published a report (the Conclusion) concluding a consultation process kicked off by last year’s discussion paper on crypto-assets and stablecoins.

Hong Kong currently has no dedicated statutory framework for regulating stablecoins. The Conclusion provides a glimpse of how this framework might look (the Proposed HK Framework). It follows reforms set in motion last year to amend the Anti-Money Laundering and Counter Terrorist Financing Ordinance to introduce a new mandatory licensing regime for virtual asset service providers (VASPs).

While the Proposed HK Framework’s granular details will only be fleshed out after further consultation, Hong Kong looks set to require fiat-referencing stablecoins to be fully backed and redeemable at par, similar to recent proposals published by fellow Asian financial hub, Singapore.

This client alert sets out the Conclusion’s key aspects and draws a high-level comparison with the Monetary Authority of Singapore’s (MAS) recently proposed stablecoin regulatory framework.