New Regulations for Stablecoins in Hong Kong: A Retail Investor's Guide and Comparison of Global Regulations

On August 1, 2025, Hong Kong officially implemented the "Stablecoin Ordinance," becoming the first region in the world to establish a complete regulatory framework for fiat stablecoins. This article will analyze the regulatory policies of the Hong Kong Monetary Authority (HKMA), provide guidance for retail investors on compliant holding of stablecoins, and compare the regulatory differences between Hong Kong, Singapore, and the United States, exploring market prospects and challenges.

Core Contents of Hong Kong's Stablecoin Regulation

The Monetary Authority has established a fiat stablecoin licensing system through the "Stablecoin Ordinance" to balance innovation and risk control. Institutions issuing fiat stablecoins or claiming to be pegged to the Hong Kong Dollar must apply for a license from the Monetary Authority and meet strict entry requirements, including sound risk management, anti-money laundering and counter-terrorist financing measures, as well as technical security capabilities. It is expected that only a few banks or fintech companies will be able to obtain a license initially. The "stablecoin sandbox" program launched by the Monetary Authority supports testing in cross-border trade and Web3 application scenarios. Issuers must ensure that reserve assets are sufficient, held in regulated custodial institutions, and regularly publish audit reports. Stablecoins are primarily positioned as payment tools, initially focusing on the cross-border trade sector to reduce retail investor risks. The ordinance includes a transitional arrangement, allowing market participants to adjust their operations before it takes effect to ensure compliance.

The establishment of this regulatory framework will provide retail investors with a more transparent and secure market environment, enabling them to participate in digital economic activities through compliant stablecoins.

How can retail investors legally hold stablecoins in Hong Kong?

Under the new regulations, retail investors can follow the steps below to hold stablecoins in compliance:

1. Choose a licensed stablecoin: Prioritize 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: Conduct transactions through virtual asset trading platforms regulated by the Monetary Authority to ensure that the platform meets KYC and AML requirements.

3. Pay attention to the use and information disclosure: Understand the specific use of stablecoins (such as cross-border payments) and the reserve audit reports of the issuing institutions to ensure value stability.

4. Beware of cross-border risks: Be aware of the technical and compliance challenges that may arise from differences in cross-chain technology or cross-border regulations.

Suggestion: Avoid investing in non-compliant stablecoins that claim to offer "high returns" and prioritize choosing issuers with high transparency and regulatory oversight.

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

Hong Kong: Comprehensive Regulatory Framework

The Hong Kong Monetary Authority's regulation is relatively strict, emphasizing reserve transparency and AML compliance, supporting stablecoins on various blockchain networks (such as Ethereum and Solana), aimed at promoting the internationalization of the RMB and cross-border trade. This policy has attracted banks and tech giants to apply for licenses, with the potential to boost Hong Kong as a digital financial center in Asia.

Singapore: Balancing flexibility and prudence

The Monetary Authority of Singapore (MAS) introduced a stablecoin regulatory framework in 2023, focusing on regulating stablecoins pegged to the Singapore dollar, requiring issuing institutions to hold adequate fiat currency reserves. The policy is relatively flexible, attracting several global issuing institutions, and testing payments and DeFi applications through "Project Orchid," with a high level of participation from retail investors.

USA: Mature market but fragmented regulation

The United States has not yet introduced a unified stablecoin bill, but proposals such as the GENIUS Act are expected to make progress in 2025. Agencies like the SEC and CFTC require issuing institutions to register as Money Services Businesses (MSB) and disclose the status of reserve assets. USDT and USDC have the largest market size in the U.S., but the conflict between state and federal regulation has 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

Opportunities: Hong Kong compliant stablecoins provide retail investors with a safe investment option. The global stablecoin market is growing rapidly, and Hong Kong may experience similar expansion. The application of multi-chain technology is expected to reduce transaction costs and improve efficiency.

Challenge: The high thresholds in Hong Kong may limit the number of issuing institutions, resulting in fewer choices for retail investors; cross-border regulatory differences increase compliance complexity; technical vulnerabilities or poor reserve management may trigger value fluctuations.

Conclusion: Retail Investors' Strategies for New Regulations

Hong Kong's "Stablecoin Regulations" create a safe and standardized investment environment for retail investors, but also require a higher level of compliance awareness. Retail investors should choose stablecoins authorized by the Monetary Authority and trade through regulated platforms, paying attention to the use and reserve transparency. Compared to Singapore's flexibility and the maturity of the U.S. market, Hong Kong places greater emphasis on financial stability and the internationalization of the Renminbi, making it suitable for conservative investors.

Action Recommendations:

• Short term: Focus on the list of the first batch of licensed issuing institutions, and choose compliant stablecoins.
• Mid-term: Participate in cross-border trade or Web3 application scenarios
• Long-term: Continuously monitor the regulatory developments in Hong Kong, Singapore, and the United States, and optimize the investment portfolio.

Investment involves risks, and it is advisable to consult a professional advisor. This article is for reference only and does not constitute investment advice.