Hong Kong's stablecoins bill brings stricter oversight, opportunity

The digital tokens could support cross-border payments and smart escrow.

Hong Kong’s recently passed Stablecoins bill raises the bar on transparency and compliance, whilst unlocking opportunities for innovation in the digital asset space, analysts said.

“Issuers will need to overhaul treasury transparency, implement robust real-time reserve attestations, and establish clear redemption mechanisms,” Elena Tzvetinova, chief operating officer at Reasoon Ltd., operating as London-based artificial intelligence fintech Eunice, told Asian Banking & Finance.

Stablecoin issuers should be clear about the reserves backing their tokens and provide mechanisms for users to redeem them for cash. Many, however, may not yet meet the bill’s standards.

“Many lack sufficient internal controls or risk frameworks that meet the bill’s standards,” Tzvetinova said in an emailed reply to questions. Eunice recently launched a stablecoin due diligence and monitoring solution for compliance and risk oversight.

Banks are expected to reassess their exposure to stablecoins and review ties with third-party providers to avoid unintentional noncompliance, she added.

Passed in May 2025, the Stablecoins bill will require any person or entity that issues fiat-referenced stablecoins—digital tokens pegged to currencies like the US dollar or Hong Kong dollar—to get a license from the Hong Kong Monetary Authority.

Only licensed issuers can advertise or sell stablecoins to retail investors in Hong Kong. The regime aims to enhance investor protection and public confidence in the digital asset sector, according to the central bank.

Tzvetinova said the law could position Hong Kong as a launchpad for bank-grade, interoperable stablecoins and serve as a gateway for regional digital currency initiatives.

Banks are already responding. ZA Bank Ltd.—Hong Kong’s first virtual bank—has been offering stablecoin reserve banking services since 2024 and is in talks with several potential issuers.

“We are prepared to meet diverse development needs as the market evolves,” Calvin Ng, CEO at ZA Bank, said in an emailed reply to questions.

“The passage of the bill has injected confidence into the market, signalling a clear regulatory direction and paving the way for responsible innovation,” he said. “It has encouraged active engagement and strategic planning among industry players.”

Standard Chartered Hong Kong earlier said it plans to launch a Hong Kong dollar-backed stablecoin in partnership with Animoca Brands Corp. Ltd. and Hong Kong Telecommunications Ltd.

Tzvetinova sees new product potential for banks—from integrating stablecoins into existing products to partnering on issuance and developing products and platforms.

Cyrus Tong, chief compliance officer at DCS Card Centre Pte. Ltd., said stablecoins could support cross-border payments, programmable wallets, tokenised assets, smart escrow, and loyalty programs.

“This could streamline settlements, reduce [foreign currency] friction, and attract institutional investors seeking regulated digital alternatives,” he said in an email.

However, Tong warned of key challenges. “Interoperability with other regimes is critical to avoid fragmentation,” he said, adding that emerging risks such as cybersecurity threats and liquidity mismatches need regulatory attention.

Tzvetinova noted that while some issuers might exit the market, those who remain will be better positioned. Companies committed to Hong Kong would likely invest in infrastructure and compliance, she added.