Interpretation of New Regulations on Stablecoins in Hong Kong: How Should Retail Investors Respond?

On August 1, 2025, Hong Kong officially implemented the "Stablecoin Regulation", marking the launch of the world's first comprehensive regulatory framework specifically for fiat-backed stablecoins. This article will delve into the regulatory policy of the Hong Kong Monetary Authority (HKMA), providing guidance for retail investors on the compliant holding of stablecoins, and comparing the differences in stablecoin regulation between Hong Kong, Singapore, and the United States, while exploring market opportunities and challenges.

Core Contents of Hong Kong's Stablecoin Regulations

The Hong Kong Monetary Authority has established a licensing system for fiat stablecoins through the "Stablecoin Regulation," aiming to balance innovation and risk. According to the new regulations, any entity issuing fiat stablecoins in Hong Kong or claiming to be pegged to the value of the Hong Kong dollar must apply for a license from the Monetary Authority. Applicants must meet a series of stringent entry requirements, including a comprehensive risk management system, anti-money laundering ( AML ) and counter-terrorism financing ( CFT ) measures, as well as strong technical security capabilities. It is expected that in the initial phase, only a few banks or fintech companies will be able to obtain a license.

The "stablecoin sandbox" program launched by the financial management bureau supports testing of cross-border trade and Web3 application scenarios. Issuers must ensure that reserve assets are sufficient and stored in regulated custodial institutions, while also regularly disclosing audit reports. The new regulations position stablecoins as payment tools, initially focusing on the cross-border trade sector to reduce retail investor risks. Additionally, the new regulations set a transition period that allows market participants to adjust their business before the regulations come into effect to ensure compliance.

For retail investors, this regulatory measure in Hong Kong will significantly enhance market transparency and security, allowing retail investors to participate in the digital economy through compliant stablecoins, but it is important to choose licensed products.

How can retail investors legally hold stablecoins in Hong Kong?

Under the new regulations in Hong Kong, retail investors must follow these steps to comply with holding stablecoins:

1. Choose a licensed stablecoin: Prioritize holding stablecoins authorized by the Monetary Authority, as these stablecoins are usually pegged to the Hong Kong Dollar or other major fiat currencies. You can check the list of issuers on the Monetary Authority's official website or compliant exchanges.

2. Use compliant platforms: Trade through virtual asset trading platforms regulated by financial authorities (VASP) to ensure the platform meets KYC and AML requirements.

3. Focus on Use and Disclosure: Understand the specific uses of stablecoins ( such as cross-border payments ) and the issuer's reserve audit reports to ensure their value stability.

4. Beware of cross-border risks: Pay attention to the technical and compliance challenges that may arise from differences in cross-chain technology or cross-border regulation.

Important Reminder: Avoid investing in non-compliant stablecoins that claim to offer "high returns". Prioritize issuers that have high transparency and are regulated.

Comparison of Stablecoin Regulation in Hong Kong, Singapore, and the United States

Hong Kong: the world's first comprehensive framework

The regulatory policy of the Hong Kong Monetary Authority is stringent, with a particular emphasis on reserve transparency and AML compliance. It supports multi-currency stablecoins ( issued on networks like Ethereum and Solana, aimed at promoting the internationalization of the Renminbi and cross-border trade. This policy has attracted numerous banks and tech giants to apply for licenses, with the potential to turn Hong Kong into a digital finance hub in Asia.

) Singapore: Balancing Flexibility and Prudence

The Monetary Authority of Singapore ### MAS ( launched a stablecoin framework in 2023, focusing on regulating stablecoins pegged to the Singapore Dollar, requiring issuers to hold sufficient fiat currency reserves. The policy is relatively flexible, attracting multiple issuers from around the world. The "Project Orchid" project tests payment and DeFi applications, with high participation from retail investors.

) USA: The market is mature but regulation is fragmented.

The United States has not yet introduced a unified stablecoin legislation, but proposals such as the "GENIUS Act" are expected to make progress in 2025. Regulators require issuers to register as Money Services Business ###MSB( and disclose reserve asset conditions. The market size for dollar stablecoins is the largest, but conflicts between state and federal regulations have increased uncertainty.

Insights for retail investors: Hong Kong has strict regulations, high security but limited choices; Singapore has flexible policies, suitable for diversified investments; the US market is mature but requires attention to regulatory risks.

Opportunities and Challenges for Retail Investors in Stablecoins

) opportunity

1. Compliant stablecoins in Hong Kong provide retail investors with a safe investment option.
2. The global stablecoin market is growing rapidly, and Hong Kong may see a similar expansion.
3. Multi-chain technology helps to reduce transaction costs and improve efficiency.

challenge

1. The high threshold in Hong Kong may limit the number of issuers, resulting in fewer choices for retail investors.
2. Cross-border regulatory differences have increased the complexity of compliance.
3. Technical vulnerabilities or poor reserve management may lead to value fluctuations.

Conclusion: Strategies for Retail Investors in Response to New Regulations

The Hong Kong "Stablecoin Regulation" provides retail investors with a safe and regulated investment environment, but it also requires retail investors to have a higher compliance awareness. Retail investors should choose stablecoins authorized by the financial management authority, trade on regulated platforms, and closely monitor their use and reserve transparency. Compared to Singapore's flexible policies and the mature market of the United States, Hong Kong places greater emphasis on financial stability and the internationalization of the Renminbi, making it suitable for retail investors seeking stable investments.

Action Recommendations

• Short-term: Pay attention to the list of the first batch of licensed issuers and choose compliant stablecoins.
• Medium term: Participate in cross-border trade or Web3 application scenarios.
• Long-term: Continuously monitor regulatory developments in Hong Kong, Singapore, and the United States, and optimize the investment portfolio.

Investing involves risks, and it is recommended to consult a professional advisor before making any investment decisions. This article is for reference only and does not constitute any investment advice.