Hong Kong stablecoin ordinance cuts speculation and fees
The Hong Kong stablecoin ordinance, effective August 2025, establishes the world’s first comprehensive regulatory framework for fiat-backed stablecoins. Under the Hong Kong stablecoin ordinance, issuers must hold 100% high-liquidity reserves and undergo regular audits. The ordinance positions stablecoins as a payment tool, not a speculative asset. It aims to slash cross-border payments costs from 3% to below 1% and enable near-instant settlement. The regulation bars secondary trading, leverage, and derivatives, and enforces strict KYC and AML requirements. Major Chinese firms are applying for licenses to use stablecoins in Greater Bay Area trade, Southeast Asian remittances, and digital gold settlements. Officials say the ordinance marks a paradigm shift in Hong Kong’s financial infrastructure and will support RMB internationalization. In the next six months, compliant issuers and offshore RMB stablecoin issuance will further drive cross-border payments adoption and stablecoin growth.
Bullish
The Hong Kong stablecoin ordinance provides clear regulatory guidelines and robust reserve requirements, reducing operational costs and settlement times. Similar to past regulatory moves in Switzerland and Singapore, such frameworks have boosted institutional adoption of stablecoins. By curbing speculation and focusing on payments, the ordinance can enhance market confidence and encourage wider use of stablecoins in trade and remittances. In the short term, traders may see reduced volatility and increased liquidity in stablecoin markets. In the long term, this regulation supports RMB internationalization and could position Hong Kong as a leading hub for compliant cross-border transactions, fostering broader crypto market growth.