Hong Kong's New Cryptocurrency Regulations

Traditional financial institutions accelerate digital transformation: breakthroughs in banks, asset management, and securities firms.

According to ChainCatcher news, the "Stablecoin Regulation" officially came into effect on August 1 in Hong Kong, as reported by CCTV News. This establishes a licensing system for fiat stablecoin issuers in Hong Kong, improving the regulatory framework for virtual asset activities in Hong Kong to maintain financial stability while promoting financial innovation.After the implementation of the "Stablecoin Regulation," anyone who issues fiat stablecoins in Hong Kong during business operations, or issues fiat stablecoins claiming to be pegged to the value of the Hong Kong dollar in or outside of Hong Kong, must apply for a license from the Financial Management Commissioner. Relevant parties must comply with regulations regarding reserve asset management and redemption, including properly segregating customer assets, maintaining a sound stabilization mechanism, and handling redemption requests from stablecoin holders at face value under reasonable conditions.Relevant parties must also meet a series of requirements related to anti-money laundering and counter-terrorism financing, risk management, disclosure regulations, auditing, and appropriate candidates. The Financial Management Commissioner will consult further on the detailed regulatory requirements of the system in due course.

Hong Kong welcomes responsible innovators, but be prepared for strict regulation.

In this emerging digital economy landscape, Hong Kong is both the starting point and the destination.

ChainCatcher news, according to Caixin, more than 40 companies are currently preparing to apply for stablecoin licenses in Hong Kong, including JD Coin Chain, Standard Chartered-Anheuser-Busch HKT consortium, Yuan Coin Innovation, and Ant International, but the final number of licenses issued is expected to be in single digits, making the competition extremely fierce.Industry insiders point out that the applying institutions are mainly large Chinese financial institutions and internet companies, with some companies already actively recruiting blockchain talent.Experts believe that while stablecoins can improve the convenience of cross-border payments, their actual cost is close to 1%, and the disruptive impact on the international monetary system is exaggerated.

On June 26, the Hong Kong Special Administrative Region Government released the "Hong Kong Digital Asset Development Policy Declaration 2.0," stating its commitment to building Hong Kong into a global leading digital asset center, a market where innovation can thrive in a controlled risk environment, bringing substantial benefits to the real economy and financial markets, and being trustworthy.

ChainCatcher news, the Secretary for Financial Services and the Treasury of the Hong Kong Special Administrative Region, Xu Zhengyu, stated in an interview at the Lujiazui Forum that the use of stablecoins is aimed at returning to the essence of finance, effectively addressing pain points in economic activities, rather than merely pursuing technological applications or simply achieving interconnectivity. The regulation of stablecoin issuance is similar to the regulation of similar financial institutions, specifically:The issuer itself needs to have capital;After exchanging money with stablecoin holders, the reserves must at all times not be less than the value of the underlying currency of the unredeemed stablecoins;If stablecoin holders wish to exchange for the local currency with the issuer, it must be completed within one trading day, one business day, or one working day.

ChainCatcher news, during the Caixin Summer Summit, the CEO of the Hong Kong Securities and Futures Commission, Ashley Alder, stated that the Hong Kong SFC had proposed a regulatory framework for virtual assets from the perspective of investor protection as early as 2018. Bitcoin has become an alternative asset and a tool for competing for financial supremacy against the backdrop of multiple cycles, geopolitical factors, and digital development. Hong Kong adopts the regulatory principle of "same business, same risks, same rules," and in addition to the licensed exchanges, the next step will be to include over-the-counter trading and custodial institutions in the regulation.The Hong Kong SFC is actively building a virtual asset ecosystem. This robust ecosystem must be compliant, risk-controlled, and sustainable to enable investors to seize new opportunities. The Hong Kong SFC supports the listing of ETFs for virtual asset spot trading and is expanding the relevant scope, such as recently allowing virtual asset staking services.

ChainCatcher news, according to CoinDesk, the Hong Kong Securities and Futures Commission plans to allow professional investors to trade crypto derivatives, expanding the local virtual asset market.Data indicates that the trading volume of the derivatives market will reach $21 trillion in the first quarter of 2025, far exceeding the spot market's $4.6 trillion. Previously, the Hong Kong Legislative Council had passed a stablecoin licensing bill to promote the construction of a virtual asset regulatory framework. The industry believes that the derivatives rules are a key piece of the compliance puzzle in Hong Kong.