Photo taken on May 12, 2025 shows the scenery on both sides of Victoria Harbour in Hong Kong, south China. [Photo/Xinhua]

The Stablecoins Ordinance officially took effect on Friday, establishing a licensing regime for fiat-referenced stablecoins (FRS) issuers in Hong Kong.

This initiative aims to enhance the regulatory framework for virtual asset activities, maintain financial stability, and promote financial innovation.

Also on Friday, the Hong Kong Monetary Authority (HKMA) published the Guideline on Supervision of Licensed Stablecoin Issuers and the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Stablecoin Issuers) in the gazette.

The HKMA stated that the licensing process will be ongoing and encourages institutions interested in applying for a license to contact the HKMA by Aug. 31. This will enable the HKMA to communicate regulatory expectations and provide appropriate feedback. Institutions that believe they are adequately prepared and wish to be considered early must submit their applications to the HKMA by Sept. 30. The public will be able to refer to the HKMA's website for information on licensed stablecoin issuers in the future.

The Legislative Council of the Hong Kong Special Administrative Region (HKSAR) passed the Stablecoins Bill on May 21. Under the new regulations, anyone issuing fiat-backed stablecoins in Hong Kong during the course of business, or issuing stablecoins purportedly pegged to the Hong Kong dollar value within or outside Hong Kong, must apply for a license.

These entities must meet relevant requirements and comply with a series of anti-money laundering and counter-terrorist financing regulations, risk management protocols, disclosure requirements, and auditing standards.