New stablecoin law to enhance Hong Kong’s financial appeal to global issuers: Chan
2025-06-15
Financial Secretary Paul Chan is confident that the ‘open model’ can help city become a cryptocurrency hub as licensing nears
The expected increase in market demand for stablecoins will encourage licensed institutions overseas to issue such cryptocurrencies in Hong Kong, boosting competitiveness, the finance minister has said as the city prepares for a regulatory regime to take effect in August.
In his weekly blog on Sunday, Financial Secretary Paul Chan Mo-po said that the market value of stablecoins globally was estimated at about US$240 billion, with trading volume exceeding US$20 trillion last year.
“With the booming digital asset market, the market demand for stablecoins is expected to increase further,” Chan said. “We have noticed that many market players are very interested in this.”
He said after the law came into effect, the Monetary Authority would process the licence applications received as soon as possible to enable qualified applicants to conduct their business, “bringing new opportunities to Hong Kong’s real economy and financial services”.
Hong Kong is among the first jurisdictions globally to introduce detailed regulations for the issuance of stablecoins, which are cryptocurrencies typically pegged to a reference asset, such as a fiat currency like the US dollar. The relevant ordinance is scheduled to take effect on August 1.
Coupled with the city’s significant offshore yuan holdings and mainland China’s restrictions on cryptocurrency use, the new law has raised hopes that the city could secure a prominent position in the stablecoin market, which is currently dominated by US dollar-backed tokens, such as Tether’s USDT and Circle’s USDC.
“Hong Kong has steadily and prudently promoted the development of stablecoins, providing a new paradigm for the global stablecoin market,” Chan said.
He added that Hong Kong had adopted a “more open” model, which allowed licensed issuers to choose different fiat currencies as the anchor for issuing stablecoins.
“This will help attract more institutions from different parts of the world to issue stablecoins in Hong Kong according to actual application scenarios, which will greatly enhance the liquidity of related activities and the competitiveness of the Hong Kong market,” he said.
Chan added that fiat stablecoins had the “security and efficiency” of blockchain technology combined with the stability of legal tender, and would become a potential tool combining the financial system and real economy to reduce costs.
Stablecoins, he noted, could function as a medium of exchange without the constraints of traditional payment times and locations and could also facilitate the automation of financial service processes.
Meanwhile, Chan also noted that as of the end of March, the number of registered funds in Hong Kong reached 976 with a net inflow of more than US$44 billion, year on year, an increase of 285 per cent.
As of the end of May, average daily trading volume of the city’s stock market had increased by about 1.2 times, year on year, to HK$242 billion, while the amount of funds raised from new shares had also neared HK$79 billion, Chan said.
“In this era of challenges and opportunities, we must seize opportunities, continuously enhance Hong Kong’s competitiveness in all aspects and improve Hong Kong’s business environment,” he said.
“We must continue to work hard and tell the Hong Kong story and the Chinese story well both internally and externally. We will surely win wider recognition.”
Sources: SCMP
