Hong Kong is entering a new phase in its digital asset journey with its Stablecoins Ordinance set to take effect on August 1 and the city aiming to position itself as an Asian centre for regulated stablecoin issuance.

The ordinance introduces a licensing regime for fiat-referenced tokens/stablecoins pegged to traditional currencies, requiring full reserve backing, anti-money laundering compliance and required governance standards. After years of groundwork, Hong Kong is shifting from policy design to real-world supervision.

The ordinance is the product of a multi-year effort that began in 2022, when the Hong Kong Monetary Authority ( HKMA ) and the Financial Services and the Treasury Bureau ( FSTB ) published their first discussion paper on stablecoins. Through industry consultations, real-world sandbox trials and joint legislative proposals, Hong Kong gradually shaped a framework that reflects both international best practices and local financial realities.

While Hong Kong refines its own path, developments in the US are progressing rapidly. On June 5 2025, Circle Internet Group, issuer of USD Coin ( USDC ), debuted on the New York Stock Exchange under the ticker CRCL, raising US$468 million at a valuation of US$7.1 billion. The initial public offering was 25 times oversubscribed, reflecting strong institutional interest in regulated crypto-native firms. The company’s share has climbed over 500% year to date.

On July 18, 2025, the Genius Act established the first comprehensive US federal framework for stablecoins, requiring one-to-one backing in cash or treasuries and compliance with anti-money-laundering rules.

The year-to-date growth of dollar-pegged stablecoins has been significant, with total supplies exceeding US$200 billion, a roughly 8% increase. Tether and USDC are the leading tokens, according to Particula and Bitwage, with market capitalizations of US$100 billion and US$60 billion respectively.

The HKMA will begin by issuing licences on an invitation-only basis, prioritizing applicants with strong governance, credible business models, and robust compliance capabilities.

“We are already seeing encouraging signs of wider market engagement,” says Paul McSheaffrey, senior banking partner at KPMG China. “New entrants are actively exploring feasibility, while established players are preparing for licence applications under the new regime.

“Meanwhile, we expect to see continued development in tokenized deposits and the e-HKD initiative – each representing important milestones in Hong Kong’s digital finance journey.”