Hong Kong's stablecoin regulatory framework is gradually taking shape, with the first batch of licenses expected to be distributed in early 2026.

Hong Kong's stablecoin regulation is accelerating into a substantive phase. With the relevant regulations set to take effect on August 1, 2025, the regulatory authority issued a series of supporting documents on July 29, including regulatory guidelines for licensed stablecoin issuers, anti-money laundering guidelines, and explanations of the licensing system, establishing a comprehensive regulatory framework covering application, operation, asset management, and compliance.

This set of guidelines not only provides a clear application path and compliance standards for the stablecoin market but also demonstrates Hong Kong's commitment to strengthening risk prevention while reserving policy space for the innovative development of stablecoins. This article will outline the key points of the relevant policies and provide an in-depth interpretation of regulatory requirements and practical paths.

The issuance time and application requirements for the first batch of stablecoin licenses

Regulators have stated that licensing will be an ongoing process. Institutions hoping to be considered should submit their applications by September 30. The first batch of licensed stablecoin issuers is expected to be announced as early as early 2026, focusing on cross-border trade and Web3 applications. In the first phase, only a few licenses will be issued, with a high threshold, and applications submitted before September 30 will be prioritized.

For fiat stablecoin issuers that currently have substantial operations in Hong Kong, a transition period of 6 months (until January 31, 2026) has been established. During the first 3 months after the regulations come into effect (before October 31, 2025), existing issuers wishing to apply for a license must submit an application and related documents.

Issuers who fail to complete the application on time, are rejected, or withdraw their application will enter a one-month winding down period starting from November 1, 2025, and must exit their business in an orderly manner. Entities that continue to engage in regulated stablecoin activities after the winding down period will be in violation of regulations and will be committing a crime.

Risk Management and Anti-Money Laundering Requirements

In terms of risk management, licensed stablecoin issuers may only delegate the offering of fiat stablecoins to approved service providers and must obtain licensing approval. Custodial assets must be strictly separated from the issuer's own assets, with regular disclosures of reserve asset management policies and audit results.

Licensees must employ multi-signature, pre-mined coin mechanisms, secure private key management, smart contract security audits, and other technical measures, and it is recommended to conduct multiple verifications in combination with off-chain rehearsals. The guidelines also emphasize that stablecoin issuing institutions must have a clear board structure and a comprehensive internal control system.

In terms of anti-money laundering, requirements for risk assessment, customer due diligence, ongoing monitoring, compliance of stablecoin transfers, and suspicious transaction reporting have been clarified. Licensed stablecoin issuers must take effective measures to identify and verify the identity of stablecoin holders, and customers must undergo a complete customer due diligence process and regular reviews.

Reserve Assets and Multi-Currency Issuance Regulations

Regulatory guidelines require that all issued stablecoins must be fully backed by assets. Qualified reserve assets include cash, bank deposits, negotiable debt securities, and other recognized high-quality, high-liquidity, and low-risk assets. Regulators will implement differentiated risk mitigation requirements based on the types and structures of the reserve assets held by the licensees.

License holders may issue "designated stablecoins" anchored to different fiat currencies based on market demand, but new coin types must be approved. It is allowed to hold qualified assets as reserves in a tokenized form, but written approval is required. In special circumstances, an application for mismatched coins can be made, but it must receive case-by-case approval and provide a reasonable explanation.

In addition, it is required that licensees shall not pay interest on the stablecoin they issue, and there are no restrictions on the custody of reserve assets abroad. They are allowed to delegate third-party investment managers for asset management, but must ensure the transparency, security, and liquidity of the assets, and regularly disclose audited reserve reports.

Eligibility and Application Procedures

The applicant must be a company incorporated in Hong Kong or a recognized institution incorporated outside of Hong Kong. Regardless of whether the applicant is a Hong Kong or overseas corporation, a substantial operational base must be established in Hong Kong.

To apply for a license, minimum criteria must be met, including financial resources, risk management, information disclosure, and business activities. The applicant must always maintain a paid-up capital of no less than HKD 25 million or an equivalent recognized financial resource. Relevant documents must be submitted, including a business plan and financial budget for the next three years, audit reports for the past three fiscal years, risk assessment reports, etc.

The application process includes initial discussions with regulatory authorities, submission of complete documentation, and waiting for the approval results. If approved, the relevant information will be published; if rejected, a written notification will be received explaining the reasons.

Several institutions have already explicitly announced their applications for stablecoin licenses, including several well-known technology companies and financial institutions. According to industry insiders, Hong Kong's first phase may only issue 3 to 4 licenses, with a total not exceeding 10.