Hong Kong will soon make it illegal to market unlicensed stablecoins to the public, as the city tightens controls ahead of the rollout of a long-anticipated regulatory framework.
The move comes as authorities seek to cool market euphoria and protect retail investors from hype and fraud in the digital asset space.
Eddie Yue, chief executive of the Hong Kong Monetary Authority (HKMA), issued a warning on Wednesday, just days before the city’s Stablecoins Ordinance comes into effect on Aug. 1.
In a blog post, he urged the public to remain cautious amid “frothy” market behavior and excessive excitement over stablecoins.
Dozens of Firms Eye Stablecoin Licenses Amid Tightening Rules
Yue said the new law will make it illegal to offer or actively promote fiat-referenced stablecoins, or FRS, to retail investors. However, this restriction applies only to those without a license from the HKMA.
“We urge the public to stay vigilant to avoid violating the law inadvertently,” he wrote, adding that some recent promotions have bordered on market manipulation or fraud.
The crackdown follows a surge of interest from companies seeking to tap into Hong Kong’s evolving Web3 ecosystem.
More than 40 firms have reached out to regulators in recent months. However, most of their proposals are still in the early stages and lack viable business plans.
Additionally, a few firms are reportedly still grappling with basic questions around risk management and technical capability.
Hong Kong’s new stablecoin regulations will take effect on August 1, introducing a strict licensing regime and reserve requirements for issuers.#HongKong #StablecoinRegulations https://t.co/Dq6UAZsKl1
— Cryptonews.com (@cryptonews) June 6, 2025
Among the companies reportedly preparing applications are Ant Group, JD.com, Standard Chartered and Circle. In addition, several law firms told Chinese outlet Yicai that more clients are still finalizing their documents. These submissions are expected once the law officially takes effect.
Stablecoin Bill Sets Strict Rules on Backing, Licensing and Access
The stablecoin bill introduces a licensing regime that covers both issuers and service providers.
According to official guidance, only a limited number of licenses will be granted at first. In addition, unlicensed stablecoin offerings will be restricted to professional investors. The first approvals are expected to come later this year.
Yue warned that many applicants may be disappointed. “A mere announcement of intention to explore stablecoin-related business or digital assets is enough for some listed companies to grab headlines and send stock prices and trading volumes soaring,” he wrote. “Investors should remain calm and exercise independent judgment.”
Under the new rules, stablecoins must be fully backed by high-quality, liquid reserves in the same currency. These reserves can include cash, bank deposits or government bonds. Moreover, they must be held in trust, separated from company assets, and shielded from creditor claims in case of insolvency.
Global Momentum Builds for Stablecoin Regulation, HK Joins In
The crackdown comes as international regulators intensify their focus on stablecoins. Recently, the Bank for International Settlements highlighted the sector’s potential money laundering risks. In particular, it warned about vulnerabilities in cross-border use cases.
The US, meanwhile, passed landmark stablecoin legislation earlier this month under President Donald Trump’s administration, signaling a global shift toward formal oversight.
Hong Kong, which has positioned itself as a digital asset hub in Asia, has taken a cautious but proactive approach.
Yue said the HKMA is finalizing its supervisory and anti-money laundering guidelines. The authority expects to publish them by the end of July. While the final rules may see minor changes from earlier drafts, the regulator is still expected to take a tough stance on financial crime safeguards.
“Regulation is an art of balancing divergent objectives,” Yue wrote. “More stringent regulatory requirements will inevitably limit the room for stablecoin businesses to scale rapidly in the short term.”
To provide clarity on the application process, the HKMA will release an explanatory note next week outlining how it will accept and assess license applications.
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