The virtual asset market is heating up, with momentum spreading from Hong Kong’s stock exchange to mainland China’s A-shares. Among the most discussed topics on investor interaction platforms is stablecoin—a digital currency pegged to traditional fiat assets like the U.S. dollar. On July 2, 2025, Tornetix revealed its research and application in blockchain, zero-trust architecture, privacy computing, and commercial cryptography related to stablecoins. The same day, Zhuochuang Information clarified it has not yet engaged in any stablecoin projects. Earlier, TF Securities announced its subsidiary received approval from the Hong Kong Securities and Futures Commission (SFC) for virtual asset trading services, while Newland Digital confirmed it is not currently involved in stablecoin operations.
This wave of corporate disclosures—and clarifications—reflects growing market interest in the regulatory and commercial evolution of stablecoins.
A Global First: Hong Kong’s Stablecoin Ordinance
At the heart of this transformation is Hong Kong’s upcoming Stablecoin Ordinance, set to take effect on August 1, 2025. This landmark legislation marks the world’s first comprehensive regulatory framework specifically designed for fiat-backed stablecoins.
“Stablecoin development is now transitioning from policy implementation to real-world pilot testing,” said Timothy Kam, CEO of China Asset Management (Hong Kong). “Hong Kong’s Web3 ecosystem is entering a new phase of growth, driven by strong institutional support and a clear regulatory roadmap.”
Chen Gang, Co-Director of Research at AID Financial, echoed this sentiment: “With the ordinance in place, Hong Kong will have one of the most advanced stablecoin regulatory frameworks globally. This builds trust, ensures compliance, and strengthens Hong Kong’s position as an international financial center and virtual asset hub.”
Defining Stablecoins: From Concept to Regulation
So what exactly is a stablecoin?
In simple terms, a stablecoin bridges the traditional financial system with the digital asset world—acting as “digital cash” backed by real-world assets. According to Hong Kong’s Stablecoin Ordinance, a stablecoin must meet four criteria:
- Serve as a publicly accepted medium of exchange for payment, debt settlement, or investment
- Be transferable, storable, or tradable electronically
- Utilize distributed ledger technology (DLT) or similar systems
- Maintain value stability by being pegged to a single asset or basket of assets
The first major stablecoin, Tether (USDT), launched in 2014. Each USDT token is backed by one U.S. dollar held in reserve. Today, USDT remains a cornerstone of crypto trading and cross-border payments.
Despite early skepticism, the stablecoin market has grown exponentially. As of June 4, 2025, the total market capitalization exceeds $250 billion**, dominated by two leaders: USDT (~$150B) and USDC** (~$60B), with over 250 other stablecoins in circulation.
The IPO of Circle, issuer of USDC, further spotlighted the sector. Listed on June 5, 2025, Circle’s stock surged nearly 170% on its first day and climbed to $192 by July 1—demonstrating strong investor confidence in regulated stablecoin ecosystems.
The Three Pillars of a Thriving Stablecoin Ecosystem
According to Guosen Securities Research Institute, a successful stablecoin depends on three key stakeholders:
- Issuers: Responsible for minting tokens, managing reserves, and ensuring price stability through transparent mechanisms.
- Ecosystem Partners: Including exchanges, banks, and merchants who accept stablecoins. Exchanges act as gateways; banks provide custody and credibility.
- Users: Their adoption drives liquidity and network effects—the lifeblood of any digital currency.
Without active participation across all three layers, even the best-designed stablecoin cannot thrive.
Hong Kong’s Regulatory Edge: Innovation Meets Oversight
While major economies like the U.S., UK, and EU are advancing their own frameworks, Hong Kong has moved fastest in establishing a dedicated legal regime for fiat-backed stablecoins.
On May 21, 2025, the Hong Kong Legislative Council passed the Stablecoin Bill, following its introduction in late 2024. This paves the way for a licensing regime overseen by the Hong Kong Monetary Authority (HKMA), setting global precedent.
Complementing this, the Hong Kong government released its Digital Asset Development Policy Declaration 2.0, confirming that the stablecoin issuer licensing system will launch on August 1.
“Stablecoin issuance is the starting point of the entire ecosystem,” Kam emphasized. “Companies must obtain an HKMA license and comply with strict requirements around reserve management, redemption guarantees, capital adequacy, and risk controls.”
Sandbox Testing: From Theory to Practice
To accelerate responsible innovation, the HKMA launched a Stablecoin Issuer Sandbox in March 2024. This controlled environment allows institutions to test business models and technical infrastructure under regulatory supervision—without full licensing obligations.
By July 2024, five entities were selected for the first cohort:
- JD ChainTech (Hong Kong), under JD Group
- Oren Coin Innovation Technology
- A joint application by Standard Chartered Bank (Hong Kong), ANI Group, and Hong Kong Telecom (HKT)
Ant International has also signaled its intent, stating it plans to apply shortly after the ordinance takes effect. The firm is expanding global treasury investments and strategic partnerships in preparation.
However, entry into the sandbox does not guarantee a license. As Guosen Securities notes: “Only a handful of licenses will be issued initially—and only to issuers with real-world use cases.”
Why Hong Kong Is Poised to Lead
As an established international financial center, Hong Kong has long maintained a forward-looking stance toward digital assets. Its journey began in 2022 with the original Virtual Asset Development Policy Declaration and the HKMA’s discussion paper on crypto and stablecoin regulation.
Now, with the Stablecoin Ordinance officially gazetted on May 30, 2025, Hong Kong has elevated its regulatory maturity.
Compare this timeline globally:
- EU’s MiCA framework passed earlier but won’t fully enforce stablecoin rules until June 2025
- UK’s FCA proposed new stablecoin regulations on May 27, focusing on issuer solvency and custody
- U.S. Senate advanced the GENIUS Stablecoin Bill on June 12, mandating full dollar reserves and annual audits for large issuers
Hong Kong’s early implementation gives it a strategic advantage.
“Hong Kong’s balanced approach—supporting innovation while managing risks—sets a new benchmark for global stablecoin development,” said Zhao Zhidong, Partner at DeHeng Law Offices Shanghai. “This law isn’t just about regulation; it’s about positioning Hong Kong at the forefront of next-generation financial infrastructure.”
Strategic Vision: Building a Tokenized Financial Future
The updated Policy Declaration 2.0 underscores Hong Kong’s ambition: enhancing market efficiency, boosting liquidity in digital asset trading, and expanding product offerings.
Chen Gang believes this provides clear direction: “It reinforces Hong Kong’s goal of becoming a global digital asset innovation center.”
Kam sees broader implications: “Web3 is driving the tokenization of all financial assets. Stablecoins already dominate cross-border payments in emerging markets—sometimes surpassing local currencies. With initiatives like central bank digital currency (CBDC), e-HKD, and the stablecoin sandbox, Hong Kong is building a ‘tokenized money + assets’ ecosystem.”
He predicts a future where global finance converges around a few dominant stablecoins—enabled by deep capital markets and widespread trade adoption.
“Hong Kong’s model could offer a new pathway for RMB internationalization,” Kam added. “More importantly, it may redefine the very foundation of global financial infrastructure.”
Frequently Asked Questions (FAQ)
Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset like the U.S. dollar or a basket of assets.
Q: When does Hong Kong’s Stablecoin Ordinance take effect?
A: The ordinance officially comes into force on August 1, 2025.
Q: Who can issue stablecoins in Hong Kong?
A: Only licensed entities approved by the Hong Kong Monetary Authority (HKMA), following strict rules on reserves, redemption, and risk management.
Q: How does Hong Kong compare to other regulators?
A: Hong Kong is the first jurisdiction to implement a dedicated legal framework for fiat-backed stablecoins ahead of full EU enforcement and U.S./UK proposals.
Q: Is USDT or USDC regulated under this law?
A: Foreign-issued stablecoins like USDT and USDC are not directly regulated unless they operate within Hong Kong. However, local issuers must comply with the new rules.
Q: Can individuals invest in stablecoins?
A: Yes, but only through authorized platforms. Retail access will be subject to investor protection measures under HKMA guidelines.