On August 1, 2025, Hong Kong's "Stablecoin Ordinance" will officially come into effect, marking the implementation of the world's first comprehensive regulatory framework for fiat-backed stablecoins. This article interprets the regulatory policies of the Hong Kong Monetary Authority (HKMA), guiding retail investors on how to hold stablecoins in compliance and comparing regulatory differences between Hong Kong, Singapore, and the US to reveal market opportunities and challenges.

Core Points of Hong Kong's "Stablecoin Ordinance"

The HKMA has established a licensing system for fiat-backed stablecoins through the "Stablecoin Ordinance" to balance innovation and risk. Any institution issuing fiat-backed stablecoins in Hong Kong or claiming to peg their value to the Hong Kong dollar must apply for a license from the HKMA and meet strict entry requirements, such as robust risk management, anti-money laundering (AML), and counter-terrorist financing (CFT) measures, as well as technological security capabilities. Initially, it is expected that only a few banks or fintech companies will be granted licenses. The HKMA's "Stablecoin Sandbox" program supports testing for cross-border trade and Web3 applications, with the first batch of participants including JD Blockchain Technology and Standard Chartered Bank. Issuers are required to ensure sufficient reserve assets, held in regulated custodial institutions, and regularly disclose audit reports. Stablecoins are positioned as payment instruments, initially focusing on cross-border trade to reduce investment risks for retail investors. A transition period arrangement allows market participants to adjust their businesses before the effective date to ensure compliance.

Significance for Retail Investors: Hong Kong's regulation enhances market transparency and security, allowing retail investors to participate in the digital economy through compliant stablecoins, but they must choose licensed products.

How Can Retail Investors Hold Hong Kong Stablecoins Compliantly?

Retail investors need to follow these steps to hold stablecoins in compliance with the new regulations in Hong Kong:

Choose Licensed Stablecoins: Prioritize holding stablecoins authorized by the HKMA, pegged to the Hong Kong dollar or other major fiat currencies. You can check the list of issuers on the HKMA's official website or through compliant exchanges.

Use Compliant Platforms: Trade through virtual asset service providers (VASPs) regulated by the HKMA to ensure that the platform meets KYC and AML requirements.

Pay Attention to Usage and Disclosure: Understand the purpose of the stablecoin (e.g., cross-border payments) and the issuer's reserve audit reports to ensure value stability.

Be Alert to Cross-border Risks: Be aware of technical and compliance challenges brought by cross-chain technology or cross-border regulatory differences.

Tip: Avoid investing in non-compliant stablecoins that claim "high returns" and prioritize transparent, regulated issuers.

Comparison of Stablecoin Regulation in Hong Kong, Singapore, and the US

Hong Kong: The First Comprehensive Framework

Hong Kong's regulatory framework is the strictest globally, emphasizing reserve transparency and AML compliance. It supports multi-currency stablecoins (e.g., on the Ethereum and Solana networks) and is positioned to promote the internationalization of the Chinese yuan and cross-border trade. The policy attracts banks and tech giants to apply for licenses, driving Hong Kong to become a digital financial hub in Asia.

Singapore: Flexibility and Prudence

The Monetary Authority of Singapore (MAS) launched a stablecoin framework in 2023, focusing on regulating stablecoins pegged to the Singapore dollar and requiring issuers to hold sufficient fiat currency reserves. The policy is flexible, attracting global issuers like Paxos and Circle. Through "Project Orchid," it tests payment and DeFi applications, with higher retail investor participation.

US: A Mature Market with Fragmented Regulation

The US has yet to enact a unified stablecoin bill, but proposals like the "GENIUS Act" are expected to see progress in 2025. Regulatory bodies such as the SEC and CFTC require issuers to register as money service businesses (MSBs) and disclose reserve assets. USDT and USDC have the largest market share, but conflicts between state-level and federal regulations increase uncertainty.

Implications for Retail Investors: Hong Kong's strict regulations offer high security but limited choices; Singapore's flexibility suits diverse investments; the US market is mature but regulatory risks need attention.

Opportunities and Challenges for Retail Investors in Stablecoin Investment

Opportunities: Compliant stablecoins in Hong Kong provide a safe investment option for retail investors. The global stablecoin market is growing rapidly. The US Treasury Secretary has stated that it could increase demand for $2 trillion in Treasury bonds, and Hong Kong may see a similar expansion. Multi-chain technology reduces transaction costs and improves efficiency.

Challenges: High entry barriers in Hong Kong limit the number of issuers and thus the choices for retail investors. Cross-border regulatory differences add complexity to compliance. Technical vulnerabilities or poor reserve management could lead to value fluctuations.

Conclusion: How Should Retail Investors Respond to the New Regulations?

Hong Kong's "Stablecoin Ordinance" provides a safe and regulated investment environment for retail investors but demands a higher level of compliance awareness. Retail investors should choose stablecoins authorized by the HKMA, trade through regulated platforms, and pay attention to the purpose and reserve transparency. Compared to Singapore's flexibility and the US's mature market, Hong Kong focuses on financial stability and the internationalization of the Chinese yuan, making it suitable for conservative investments.

Action Recommendations: In the short term, focus on the list of first-batch licensed issuers and choose compliant stablecoins. In the medium term, participate in cross-border trade or Web3 scenarios. In the long term, keep track of regulatory developments in Hong Kong, Singapore, and the US to optimize your investment portfolio.

Keywords: Hong Kong stablecoin regulation, HKMA framework, retail investor compliance, stablecoin investment, Singapore stablecoin, US stablecoin, cross-border trade, internationalization of the Chinese yuan

Investing involves risks. Please consult a professional advisor. This article is for information sharing only and not investment advice.