Hong Kong officially passed the "Stablecoin Issuers Ordinance Draft", providing a complete regulatory framework for stablecoins.

Recently, the Hong Kong Legislative Council officially passed the "Stablecoin Issuers Ordinance Bill" in its third reading, making it the world's first bill to provide a complete regulatory framework for stablecoins. The ordinance is expected to take effect within this year, at which point it will implement strict regulations on activities related to stablecoins.

According to the new regulations, three types of activities related to stablecoins will require a license: issuance of fiat stablecoins in Hong Kong, issuance of Hong Kong dollar stablecoins in any region, and actively promoting the issuance of fiat stablecoins to the public in Hong Kong.

Individuals or entities applying for a license must submit a formal application to the Hong Kong Monetary Authority. The authority will review the applicant based on whether they meet the minimum standards, which include capital strength, risk management capability, corporate governance structure, and internal control systems, among others. For example, license holders must have a minimum capital of HKD 25 million.

The obtained license has no fixed term and will remain valid unless revoked or the licensee loses qualification. However, if the licensee fails to meet minimum standards or encounters significant issues, the Monetary Authority has the right to revoke or suspend the license and may appoint a statutory manager to take over the business if necessary to protect public interest.

The regulations stipulate that only designated licensed institutions can sell fiat stablecoins in Hong Kong, and only fiat stablecoins issued by licensed issuers can be sold to retail investors. These designated licensed institutions include stablecoin issuers licensed by the Monetary Authority, banks, institutions holding Type 1 licenses issued by the Securities and Futures Commission, and virtual asset trading platforms licensed in Hong Kong.

It is worth noting that engaging in regulated stablecoin activities without a license or unauthorized sale of designated stablecoins will be regarded as a criminal offense, punishable by a fine of up to HKD 5 million and 7 years of imprisonment. The penalty for summary conviction is a fine of HKD 500,000 and 2 years of imprisonment, with an additional penalty of up to HKD 100,000 per day for continued violations.

The new regulations impose strict requirements on stablecoin issuers, including 100% reserves and custodial segregation, unconditional redemption mechanisms, and a stringent compliance framework. Issuers must ensure that reserve assets consist of high-quality, highly liquid assets, and are equal in value to the circulating fiat stablecoin denomination. Reserve assets must be properly separated and safeguarded from the issuer's own assets to ensure fund security.

In addition, stablecoin holders have the right to redeem stablecoins at face value, and the redemption process shall not incur any fees and must be processed within a reasonable time. Licensed issuers must also comply with a series of strict regulatory requirements, including anti-money laundering, risk management, adequate information disclosure, and qualified auditor selection, to ensure operational transparency and soundness.

The industry has shown a positive attitude towards this legislation. Several institutions have begun to support Hong Kong's stablecoin and related projects, accelerating the construction of on-chain infrastructure for stablecoin issuance, circulation, and management. Some industry insiders believe that the passage of this bill is an important step in building Web3 infrastructure, which will have a profound impact on the development of the digital asset market.

With the implementation of the regulations, institutions are expected to begin applying to the Hong Kong Monetary Authority to become compliant stablecoin issuers by the end of this year. The industry hopes that this move will further promote the application of stablecoins in areas such as physical retail and cross-border trade, while some have also suggested considering the release of stablecoin interest to enhance market appeal.

Overall, Hong Kong has taken an important step in global stablecoin regulation through the "Stablecoin Issuers Bill," providing new impetus and direction for the healthy development of the digital asset market.