Hong Kong's Stablecoin Regulation Bill Passed: Analysis of Its Impact on the Virtual Money Industry in Hong Kong and the Mainland

On May 21, 2025, the Legislative Council of the Hong Kong Special Administrative Region passed the "Stablecoin Ordinance Proposal," making Hong Kong the first jurisdiction in the world to establish a full-chain regulatory system for fiat stablecoins. This legislative action not only provides a clear legal framework for Hong Kong's virtual asset industry but also brings profound positive impacts on the development of the virtual money industry in Hong Kong and mainland China by balancing financial innovation with risk prevention. This article will analyze the positive significance of the passage of this bill from the perspectives of Hong Kong and mainland China, combining policy background, industry impact, and future trends.

1. Positive Impact on Hong Kong

(1) Strengthen Hong Kong's status as a global digital asset center.

As an international financial center, Hong Kong has been continuously making efforts in the virtual asset field in recent years. The passage of the "Stablecoin Ordinance Draft" further consolidates Hong Kong's leadership position in the global digital asset market. The bill clarifies the regulatory requirements for stablecoin issuers, including a registration capital threshold of HKD 25 million, a 1:1 reserve asset backing issuance volume, and mandatory unconditional redemption rights. These strict yet clear regulatory standards provide a transparent compliance environment for the stablecoin market, helping to attract global investors and businesses to choose Hong Kong as the operational center for stablecoin activities.

The Hong Kong Monetary Authority plans to quickly release regulatory guidelines after the bill is passed and open license applications by the end of 2025. This will attract numerous institutions to actively participate, accelerating the development and application of the Hong Kong dollar stablecoin. The launch of the Hong Kong dollar stablecoin will not only enhance Hong Kong's competitiveness in the cross-border payment sector but also promote the development of the Web3 ecosystem, injecting new vitality into Hong Kong's digital economy. For example, the Hong Kong dollar stablecoin can be used for efficient and low-cost cross-border trade settlements, further consolidating Hong Kong's position as a financial hub in Asia.

(2) Promote financial innovation and technological development

The passage of the "Stablecoin Regulation Draft" indicates that the Hong Kong government views stablecoins as an important component of digital financial infrastructure, rather than a marginal technology. The bill provides a clear compliance pathway for stablecoin issuers, encouraging companies to innovate within a regulatory framework. Some large corporate groups have entered the stablecoin "sandbox" testing phase in Hong Kong, demonstrating corporate confidence in the Hong Kong market. This "regulatory sandbox" mechanism allows companies to test innovative products in a controlled environment, reducing compliance costs for startups while providing room for technological iteration.

Stablecoins, as a core component of decentralized finance (DeFi), will drive further development in areas such as Web3, NFTs, and the metaverse. The Hong Kong government has been laying out virtual asset regulations since 2022, conducting public consultations in 2023 and launching a regulatory sandbox in 2024, demonstrating long-term support for the Web3 ecosystem. The passage of the bill will further stimulate the application of blockchain technology in areas such as payments, settlements, and supply chain finance, creating a vibrant digital asset ecosystem in Hong Kong.

(3) Enhance market confidence and investor protection

The virtual asset industry is facing a crisis of trust due to some past events. Hong Kong has effectively reduced market risks by establishing a comprehensive regulatory framework for stablecoins, emphasizing reserve asset management, liquidity, and anti-money laundering (AML) requirements. These measures ensure the sustainability of stablecoin issuers' business models while providing investors with greater security. For example, the mandatory 1:1 reserve asset requirement and unconditional redemption rights can effectively prevent the risk of stablecoin decoupling, enhancing the market's trust in stablecoins.

In addition, Hong Kong's regulatory framework seeks a balance between innovation and protection, demonstrating an open and inclusive attitude. This balance not only attracts the attention of global crypto enterprises but also provides local retail investors with safer investment channels. Some banks have taken the lead in launching virtual asset trading services, supporting mainstream cryptocurrency trading, and may further expand to stablecoin trading in the future. This pioneering demonstration effect will encourage more financial institutions to enter the virtual asset market, expanding Hong Kong's investor base.

(4) Promote cross-border payments and financial interconnectivity

Stablecoins have the advantages of low cost and high efficiency in cross-border payments, and the stablecoin legislation in Hong Kong lays the foundation for the widespread use of the Hong Kong dollar stablecoin. The launch of the Hong Kong dollar stablecoin will optimize financial connectivity between Hong Kong and other regions in Asia, especially in the context of the "Belt and Road" initiative and the Guangdong-Hong Kong-Macau Greater Bay Area development. For example, the Hong Kong dollar stablecoin can be used for cross-border e-commerce, trade settlements, and supply chain finance, reducing transaction costs and improving settlement efficiency. This will not only help Hong Kong consolidate its status as a global trade center but also provide more digital financial tools for local businesses.

2. Positive Impact on the Mainland

(1) Provide regulatory experience reference for the mainland.

Mainland China has a relatively strict regulatory attitude towards Virtual Money, prohibiting cryptocurrency business transactions and ICOs, but maintains an open attitude towards blockchain technology. The passing of Hong Kong's "Stablecoin Regulatory Framework" provides a reference regulatory model for the mainland. Hong Kong's regulatory framework emphasizes a balance between compliance, risk prevention, and financial innovation, which aligns with the mainland's policy objectives of promoting the application of blockchain technology in the financial sector (such as digital RMB).

For example, Hong Kong's "regulatory sandbox" mechanism provides a testing environment for stablecoin issuance, and this model may inspire the mainland to explore similar pilot mechanisms in specific areas, such as central bank digital currency (CBDC) or supply chain finance. As a bridge between the mainland and international markets, Hong Kong's successful experience may promote the gradual relaxation of regulatory restrictions on virtual assets such as stablecoins in the mainland in the future, especially in the area of stablecoins pegged to the Hong Kong dollar or Renminbi.

(2) Promote the internationalization of the renminbi

Hong Kong's stablecoin legislation provides a testing ground for non-USD stablecoins (such as those pegged to the Hong Kong dollar or the Renminbi). Although current regulation in Hong Kong primarily focuses on Hong Kong dollar stablecoins, its open regulatory approach offers possibilities for exploring Renminbi stablecoins. As an offshore center for the Renminbi, Hong Kong has a mature financial infrastructure and an internationalized market environment, making it suitable as a testing ground for Renminbi stablecoins. If a Renminbi stablecoin is successful in Hong Kong, it will further promote the use of the Renminbi in global payments and settlements, aiding the internationalization process of the Renminbi.

For example, the stablecoin regulatory framework in Hong Kong may provide compliant channels for mainland enterprises to issue RMB-pegged stablecoins for cross-border trade and investment. This model not only enhances the international acceptance of the RMB but also provides mainland enterprises with new financing and payment tools, strengthening their competitiveness in the global market.

(3) Promote the coordinated development of financial technology in the Guangdong-Hong Kong-Macau Greater Bay Area

The Guangdong-Hong Kong-Macau Greater Bay Area is an important region for mainland China to promote the application of financial technology and blockchain technology. Hong Kong's stablecoin legislation provides new opportunities for the coordinated development of fintech in the Greater Bay Area. For example, the Hong Kong dollar stablecoin can complement the digital renminbi to jointly serve the cross-border payment, trade financing, and supply chain finance needs of the Greater Bay Area. Hong Kong's regulatory experience and mature financial market can provide compliance guidance for Greater Bay Area enterprises, attracting more mainland technology companies to enter the international market through Hong Kong.

In addition, virtual asset trading platforms and stablecoin issuers in Hong Kong may collaborate with mainland enterprises to develop blockchain-based financial products. For example, stablecoins could be used on supply chain finance platforms in the Greater Bay Area to address the financing difficulties faced by small and medium-sized enterprises. This cross-regional cooperation will promote the integration and development of the fintech ecosystem in the Greater Bay Area.

(4) Indirectly stimulate the application of blockchain technology in the region.

Although the mainland takes a cautious attitude towards cryptocurrency trading, blockchain technology has been widely applied in areas such as supply chain finance, cross-border payments, and digital identity authentication. Hong Kong's stablecoin legislation provides a successful case for the commercialization of blockchain technology, which may indirectly stimulate mainland enterprises to accelerate the research and development and application of blockchain technology within a compliance framework. For example, Hong Kong's stablecoin "sandbox" testing experience can provide technical references for mainland enterprises, promoting the implementation of blockchain in the fintech sector.

3. Future Trends Outlook

The passage of the Hong Kong "Stablecoin Bill" marks a new stage in global stablecoin regulation. In the future, Hong Kong may become a global testing ground for non-U.S. dollar stablecoins, attracting more international companies to its market. At the same time, Hong Kong's regulatory model may provide a reference for other countries and regions, promoting the coordination and development of global stablecoin regulation.

For mainland China, Hong Kong's successful experience may encourage regulators to gradually relax restrictions on Virtual Money in the future, especially in areas related to the internationalization of the Renminbi. Mainland enterprises can participate in the global digital asset market through compliant channels in Hong Kong, enhancing their international competitiveness. In addition, fintech cooperation between Hong Kong and mainland China will further deepen under the framework of the Guangdong-Hong Kong-Macao Greater Bay Area, forming a model for regional collaborative development.

4. Conclusion

The passage of the "Stablecoin Regulation Draft" in Hong Kong has far-reaching positive impacts on the virtual money industry in both Hong Kong and mainland China. For Hong Kong, the bill solidifies its position as a global digital asset hub, promoting financial innovation, investor protection, and the development of cross-border payments. For mainland China, Hong Kong's regulatory experience provides a reference, indirectly stimulating the internationalization of the yuan, the collaborative development of fintech in the Greater Bay Area, and the application of blockchain technology. In the future, as the stablecoin market in Hong Kong matures and further cooperation with the mainland progresses, both sides will occupy a more important position in the global digital finance field, injecting new momentum into regional economic development.