The virtual asset market is heating up, with momentum spreading from Hong Kong’s stock exchange to mainland China’s A-shares. In recent investor interactions on Shanghai and Shenzhen exchanges, stablecoins have emerged as a hot topic. On July 2, cybersecurity firm Tianrongxin confirmed its research into blockchain, zero-trust architecture, privacy computing, and commercial cryptography related to stablecoins. The same day, data analytics provider Zhuochuang Information clarified it has no current involvement in stablecoin projects. Meanwhile, Tianfeng Securities announced its subsidiary received approval from Hong Kong’s Securities and Futures Commission (SFC) for virtual asset trading services, while Newland Digital confirmed it hasn’t ventured into stablecoin operations.
These disclosures—and clarifications—highlight growing market interest in stablecoin development.
Industry experts point to three key drivers: regulatory greenlighting, operational efficiency, and strategic positioning. The most significant catalyst is the upcoming enforcement of Hong Kong’s Stablecoin Ordinance, set to take effect on August 1, 2025. This landmark legislation marks the world’s first comprehensive regulatory framework specifically targeting fiat-backed stablecoins.
A New Regulatory Era for Stablecoins
“Stablecoin development is now transitioning from policy implementation to real-world pilot applications,” said Timothy Kam, CEO of华夏基金 (Hong Kong). “Hong Kong’s Web3 ecosystem is entering a new phase of growth, creating sustainable momentum for local innovation.”
Chan Kong, Co-Director of Research at AID Financial, echoed this sentiment: “With the ordinance in place, Hong Kong will possess the world’s most advanced stablecoin regulatory framework, establishing a solid foundation of compliance and trust that significantly boosts its credibility.”
According to legal experts Zhao Zhidong and Zhang Ziyu from DeHeng Law Offices, the swift passage of the Stablecoin Ordinance reflects Hong Kong’s determination to lead in global digital currency regulation. By setting a new benchmark for fiat-referenced stablecoins, the city reinforces its status as an international financial center and virtual asset hub.
What Are Stablecoins?
In simple terms, stablecoins bridge traditional fiat currencies—like the US dollar—with the digital asset world. Often described as “digital cash,” they maintain price stability by pegging their value to real-world assets.
Under Hong Kong’s definition, a stablecoin is a form of cryptocurrency denominated in a unit of account or economic value that meets four criteria:
- It serves as a publicly accepted medium of exchange for payments, debt settlement, or investment.
- It can be electronically transferred, stored, or traded.
- It uses distributed ledger technology (DLT) or similar systems.
- Its value is pegged to a single asset or basket of assets.
The first stablecoin, Tether (USDT), launched in 2014. Each USDT is backed by one US dollar held in reserve, making it a foundational tool in crypto trading and cross-border payments.
Despite early skepticism, the stablecoin market has grown exponentially. As of June 2025, total issuance exceeds **$250 billion**, dominated by two major players: USDT ($150B+) and USDC ($60B+), with over 250 other stablecoins in circulation.
The IPO of Circle—the issuer of USDC—further spotlighted the sector. Listed as the “first stablecoin stock” (CRCL), it surged nearly 170% on its debut day and reached $192 per share by July 1, up from an IPO price of $31.
The Stablecoin Ecosystem: Users, Issuers, and Enablers
Guosen Securities Research Institute emphasizes that a successful stablecoin requires collaboration among three core groups:
- Issuers: Responsible for minting coins, managing reserves, and ensuring price stability through transparent mechanisms.
- Ecosystem Partners: Including exchanges, banks, and merchants who accept stablecoins. Exchanges and retailers serve as access points; banks provide custodial services and trust.
- Users: Their adoption and transaction volume form the foundation of any stablecoin’s success.
Hong Kong Leads Global Stablecoin Regulation
While major economies are advancing their own frameworks, Hong Kong stands out as the first international financial center to implement a dedicated licensing regime for fiat-referenced stablecoins.
On May 21, 2025, the Hong Kong Legislative Council passed the Stablecoin Bill, originally proposed in late 2024. This paves the way for the Monetary Authority of Hong Kong (HKMA) to license stablecoin issuers and enforce strict rules on reserve management, redemption rights, capital adequacy, and risk controls.
Complementing this, the government released the Hong Kong Digital Assets Development Policy Declaration 2.0, confirming the August 1 launch of the licensing system.
FAQ: Understanding Hong Kong’s Stablecoin Framework
Q: What makes Hong Kong’s Stablecoin Ordinance unique?
A: It's the world’s first comprehensive legal framework specifically for fiat-backed stablecoins, combining innovation support with robust consumer protection.
Q: Who can apply for a stablecoin license in Hong Kong?
A: Financial institutions, fintech firms, and tech companies with credible business models and real-world use cases may apply. Initial approvals will likely be limited to single digits.
Q: Is participation in the sandbox required before getting a license?
A: While not mandatory, the HKMA launched a "Stablecoin Issuer Sandbox" in March 2024 to allow firms to test systems under regulatory supervision—giving participants a strategic advantage.
From Concept to Reality: The Sandbox Advantage
“The technology and pilot programs have moved beyond theory—stablecoins are now in practical deployment,” said Kam. “The HKMA has initiated sandbox testing, and we’re actively exploring integrated applications across payments, redemption, and asset management.”
The sandbox enables controlled experimentation without full regulatory burden. In July 2024, five entities were selected:
- Two blockchain firms: JD Blockchain Tech (Hong Kong) and OSL Innovation
- A joint application by Standard Chartered Bank (Hong Kong), ANX Group, and Hong Kong Telecom (HKT)
Ant International has also signaled plans to apply shortly after the ordinance takes effect, expanding its global treasury operations.
“Only a few licenses will be granted initially,” noted Guosen Research. “Applicants must demonstrate tangible use cases—being in the sandbox doesn’t guarantee approval.”
👉 See how leading fintech innovators are preparing for Hong Kong’s new stablecoin era.
Strategic Vision: Building a Global Virtual Asset Center
Hong Kong’s ambition isn’t new. Since releasing its original Virtual Asset Development Policy Declaration in 2022, the city has steadily built a pro-innovation regulatory environment. That year, the HKMA also published consultation papers on crypto assets and stablecoins.
Compared to other jurisdictions:
- The EU’s MiCA framework passed earlier but won’t fully apply until June 2025.
- The UK’s FCA proposed stablecoin rules in May 2025 focusing on issuer solvency.
- The US Senate advanced the GENIUS Stablecoin Bill requiring full dollar backing and annual audits for large issuers.
Hong Kong’s faster implementation gives it a first-mover edge.
Zhao Zhidong emphasized: “The ordinance creates a balanced framework that fosters innovation while managing risk—setting a new global standard and attracting fintech firms to establish operations here.”
Future Outlook: Tokenization and Financial Transformation
Chan Gang believes Policy Declaration 2.0 provides clear direction for enhancing market liquidity and expanding digital asset product offerings—solidifying Hong Kong’s role as a global digital asset innovation center.
Kam envisions broader implications: “Web3 technologies are driving full tokenization of financial assets. Stablecoins already dominate cross-border payments in emerging markets—sometimes surpassing local currencies.”
Through experiments in central bank digital currency (CBDC), e-HKD, and stablecoin sandboxes, Hong Kong is building a new financial ecosystem based on tokenized money and assets.
“This convergence could reshape global financial infrastructure,” he added. “While global monetary systems may consolidate around a few dominant stablecoins, success depends on deep financial markets and real trade usage. Hong Kong’s model not only opens new paths for RMB internationalization but may redefine the very foundation of international finance.”
👉 Join the next wave of financial evolution powered by regulated stablecoin innovation.
FAQ: Broader Implications
Q: How does this affect traditional finance?
A: Mainstream institutions are increasingly entering the space due to clearer regulations—enabling integration between traditional finance and digital assets.
Q: Could stablecoins challenge sovereign currencies?
A: In high-inflation or underbanked regions, yes. But widespread adoption requires regulatory alignment and macroeconomic stability—areas where Hong Kong excels.
Q: What role does technology play?
A: Distributed ledger technology ensures transparency and efficiency. Combined with smart contracts, it enables programmable money for complex financial workflows.
Core Keywords: stablecoin, Hong Kong, virtual asset hub, financial center, regulation, tokenization, Web3, digital assets