What impact will Hong Kong's passed Draft Stablecoin Ordinance have on China's cryptocurrency community?
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What impact will Hong Kong's passed Draft Stablecoin Ordinance have on China's cryptocurrency community?
The passage of Hong Kong's Draft Stablecoin Ordinance will have far-reaching positive impacts on the virtual currency industry in both Hong Kong and mainland China.
Navigating Web3 tides with focused insightsAuthor: Crypto Salad
The Legislative Council of the Hong Kong Special Administrative Region passed the Draft Stablecoin Ordinance on May 21, 2025, marking Hong Kong as the first jurisdiction globally to establish a full-chain regulatory framework for fiat-referenced stablecoins. This legislative move not only provides a clear legal framework for Hong Kong's virtual asset industry but also brings profound positive impacts to the development of the cryptocurrency sector in both Hong Kong and mainland China by balancing financial innovation with risk control. Lawyer Liu (web3_lawyer) analyzes the positive implications of this bill from dual perspectives—Hong Kong and mainland China—covering policy context, industry impact, and future trends.
1. Positive Impacts on Hong Kong
(1) Strengthening Hong Kong’s Position as a Global Digital Asset Hub
As an international financial center, Hong Kong has been actively advancing in the virtual asset space in recent years. The passage of the Draft Stablecoin Ordinance further consolidates Hong Kong’s leadership position in the global digital asset market. The bill sets out clear regulatory requirements for stablecoin issuers, including a minimum registered capital of HKD 25 million, 1:1 reserve asset backing for issuance volume, and mandatory unconditional redemption rights. These strict yet transparent standards create a compliant and predictable environment for the stablecoin market, attracting global investors and businesses to establish stablecoin operations in Hong Kong.
In addition, the Hong Kong Monetary Authority (HKMA) plans to issue regulatory guidelines shortly after the bill's enactment and open license applications by the end of 2025. This will encourage institutions such as Standard Chartered Hong Kong and Anyi Group to actively participate, accelerating the development and application of Hong Kong dollar-pegged stablecoins. The launch of HKD-pegged stablecoins will not only enhance Hong Kong’s competitiveness in cross-border payments but also drive the growth of the Web3 ecosystem, injecting new vitality into Hong Kong’s digital economy. For example, HKD stablecoins can be used for efficient and low-cost cross-border trade settlements, further solidifying Hong Kong’s role as an Asian financial hub.
(2) Promoting Financial Innovation and Technological Development
The passage of the Draft Stablecoin Ordinance signals that the Hong Kong government views stablecoins as a key component of digital financial infrastructure rather than a fringe technology. By offering stablecoin issuers a clear compliance pathway, the bill encourages enterprises to innovate within a regulated environment. For instance, JD Group has already entered the "sandbox" testing phase for its stablecoin in Hong Kong, reflecting strong business confidence in the market. This “regulatory sandbox” mechanism allows companies to test innovative products in a controlled setting, reducing compliance costs for startups while enabling technological iteration.
As a core element of decentralized finance (DeFi), the legalization of stablecoins will further advance sectors such as Web3, NFTs, and the metaverse. Since 2022, the Hong Kong government has been laying the groundwork for virtual asset regulation, conducting public consultations in 2023 and launching a regulatory sandbox in 2024—demonstrating long-term support for the Web3 ecosystem. The bill’s passage will further catalyze blockchain applications in payments, settlement, supply chain finance, and other fields, helping Hong Kong build a vibrant digital asset ecosystem.
(3) Enhancing Market Confidence and Investor Protection
The virtual asset industry has faced trust challenges due to past incidents such as the FTX collapse. By establishing a comprehensive stablecoin regulatory system emphasizing reserve management, liquidity, and anti-money laundering (AML) requirements, Hong Kong effectively reduces market risks. These measures ensure the sustainability of stablecoin issuers’ business models while offering greater security for investors. For example, mandatory 1:1 reserve backing and unconditional redemption rights help prevent stablecoin de-pegging risks, strengthening market trust in stablecoins.
Moreover, Hong Kong’s regulatory framework strikes a balance between innovation and protection, demonstrating an open and inclusive approach. This equilibrium not only draws attention from global crypto firms but also offers local retail investors safer investment avenues. For example, ZA Bank has taken the lead in launching virtual asset trading services supporting Bitcoin and Ethereum, with potential expansion into stablecoin trading. Such first-mover examples are likely to encourage more financial institutions to enter the virtual asset market, broadening Hong Kong’s investor base.
(4) Advancing Cross-Border Payments and Financial Connectivity
Stablecoins offer advantages of low cost and high efficiency in cross-border payments. Hong Kong’s stablecoin legislation lays the foundation for widespread adoption of HKD-pegged stablecoins. The introduction of HKD stablecoins will optimize financial connectivity between Hong Kong and other parts of Asia, particularly under initiatives like the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) development. For example, HKD stablecoins can be used in cross-border e-commerce, trade settlement, and supply chain finance, lowering transaction costs and improving settlement efficiency. This strengthens Hong Kong’s status as a global trade hub and provides local businesses with more digital financial tools.
2. Positive Impacts on Mainland China
(1) Providing Regulatory Reference for the Mainland
Mainland China maintains a strict regulatory stance toward cryptocurrencies, banning crypto-based business transactions and ICOs, while remaining open to blockchain technology. The passage of Hong Kong’s Draft Stablecoin Ordinance offers a reference model for mainland regulators. Hong Kong’s framework emphasizes compliance, risk control, and balanced innovation—aligning with mainland policies promoting blockchain applications in finance, such as the digital yuan.
For example, Hong Kong’s “regulatory sandbox” provides a testing ground for stablecoin issuance, a model that could inspire similar pilot programs in mainland China within specific domains such as central bank digital currencies (CBDCs) or supply chain finance. As a bridge between the mainland and international markets, Hong Kong’s success may encourage mainland authorities to gradually relax restrictions on virtual assets like stablecoins, especially those pegged to the Hong Kong dollar or renminbi.
(2) Supporting RMB Internationalization
Hong Kong’s stablecoin legislation creates an experimental arena for non-U.S. dollar stablecoins, including those pegged to the Hong Kong dollar or RMB. While current regulations primarily focus on HKD-pegged stablecoins, the open regulatory approach opens the door for exploring RMB-pegged stablecoins. As an offshore RMB hub, Hong Kong possesses mature financial infrastructure and an internationalized market environment, making it an ideal testing ground for RMB stablecoins. If successful, RMB-pegged stablecoins in Hong Kong could boost the use of the renminbi in global payments and settlements, advancing RMB internationalization.
For instance, Hong Kong’s regulatory framework may provide mainland enterprises with a compliant channel to issue RMB-pegged stablecoins via Hong Kong for cross-border trade and investment. This model would enhance the international acceptance of the RMB and offer mainland firms new financing and payment tools, strengthening their competitiveness in global markets.
(3) Promoting FinTech Synergy in the Greater Bay Area
The Guangdong-Hong Kong-Macao Greater Bay Area is a key region in mainland China for advancing fintech and blockchain applications. Hong Kong’s stablecoin legislation presents new opportunities for regional fintech collaboration. For example, HKD-pegged stablecoins could complement the digital yuan, jointly serving cross-border payment, trade finance, and supply chain needs within the GBA. Hong Kong’s regulatory expertise and mature financial markets can guide mainland firms toward compliance, encouraging more Chinese tech companies to access international markets through Hong Kong.
Additionally, Hong Kong-based virtual asset platforms and stablecoin issuers may collaborate with mainland enterprises to develop blockchain-based financial products. For example, stablecoins could be deployed on GBA supply chain finance platforms to address SME financing challenges. Such cross-regional cooperation will promote integration and growth of the GBA’s fintech ecosystem.
(4) Indirectly Stimulating Blockchain Applications in Mainland China
While mainland China remains cautious about cryptocurrency trading, blockchain technology is already widely applied in areas such as supply chain finance, cross-border payments, and digital identity verification. Hong Kong’s stablecoin legislation provides a successful case of commercial blockchain application, potentially stimulating mainland enterprises to accelerate blockchain research and deployment within compliant frameworks. For example, insights from Hong Kong’s stablecoin sandbox trials could inform technical development in mainland China, facilitating real-world fintech implementations.
3. Future Outlook
The passage of Hong Kong’s Draft Stablecoin Ordinance marks a new phase in global stablecoin regulation. Going forward, Hong Kong may become a global testing ground for non-dollar stablecoins, attracting more international firms to its market. Meanwhile, Hong Kong’s regulatory model may serve as a reference for other jurisdictions, fostering coordination and development in global stablecoin oversight.
For mainland China, Hong Kong’s success could prompt regulators to gradually ease restrictions on virtual assets, particularly in areas tied to RMB internationalization. Mainland enterprises could leverage Hong Kong’s compliant channels to engage in the global digital asset market, enhancing their international competitiveness. Furthermore, fintech collaboration between Hong Kong and the mainland is expected to deepen under the GBA framework, setting a benchmark for regional synergy.
4. Final Thoughts
The passage of Hong Kong’s Draft Stablecoin Ordinance has far-reaching positive implications for the cryptocurrency industries in both Hong Kong and mainland China. For Hong Kong, the bill reinforces its status as a global digital asset hub, promotes financial innovation, strengthens investor protection, and advances cross-border payment systems. For mainland China, Hong Kong’s regulatory experience offers valuable insights, supports RMB internationalization, fosters fintech collaboration in the Greater Bay Area, and indirectly stimulates broader blockchain adoption. As Hong Kong’s stablecoin market matures and cooperation with the mainland deepens, both regions are poised to play increasingly important roles in global digital finance, driving new momentum for regional economic development.
The views expressed are solely those of the author and do not constitute legal advice or opinions on any specific matters.
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