Hong Kong Advances Web3 Ambitions with New Stablecoin Licensing Framework
This landmark legislation, passed on May 21, 2025, establishes a robust regulatory framework for stablecoin issuers operating within the special administrative region.
The new law mandates that all stablecoin issuers must obtain licenses from the Hong Kong Monetary Authority (HKMA) before conducting business. Key requirements include maintaining full reserves backing for issued stablecoins, implementing stringent risk management protocols, and ensuring transparent disclosure of reserve compositions. The legislation also stipulates that licensed issuers must segregate client assets and undergo regular third-party audits to verify reserve adequacy.
This regulatory development aligns with Hong Kong’s broader strategy to become a premier destination for digital asset businesses while maintaining investor protection and financial stability. The framework addresses critical concerns around stablecoin stability, particularly in light of past market disruptions, by requiring issuers to hold high-quality, highly liquid assets as reserves. Additionally, the law incorporates provisions for operational resilience, cybersecurity standards, and consumer protection measures.
Hong Kong's Robust AML Framework
Hong Kong maintains one of Asia’s most comprehensive Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulatory frameworks. The jurisdiction’s AML regime, overseen by multiple regulators including the HKMA, Securities and Futures Commission (SFC), and the Insurance Authority, requires financial institutions and virtual asset service providers to implement robust customer due diligence procedures, transaction monitoring systems, and suspicious transaction reporting mechanisms. With the introduction of the stablecoin licensing regime, these AML/CTF obligations now extend to stablecoin issuers, who must establish comprehensive compliance programs that include know-your-customer (KYC) procedures, ongoing monitoring of business relationships, and regular risk assessments to identify and mitigate money laundering and terrorist financing risks.
Partner with CityLinkers Advisory for Comprehensive Compliance Solutions
At CityLinkers Advisory, we understand the complexities of navigating Hong Kong’s evolving regulatory landscape, particularly in the dynamic digital asset sector. Our team of experienced professionals specializes in providing tailored AML and CTF compliance services designed to meet the stringent requirements set forth by Hong Kong regulators. We work closely with financial institutions and, virtual asset service providers, now stablecoin issuers to develop and implement compliance frameworks that satisfy regulatory obligations with a focus on operational efficiency and risk management capabilities.
Our comprehensive service offerings include internal audit solutions that provide independent assessment of your compliance programs, ensuring they remain effective and aligned with regulatory expectations. We also offer policies advisory services, helping organizations develop, review, and update their internal policies and procedures to address emerging risks and regulatory changes.
Whether you’re establishing a new stablecoin operation in Hong Kong or enhancing your existing compliance infrastructure, CityLinkers Advisory stands ready to be your trusted partner in achieving and maintaining regulatory compliance while supporting your business growth objectives in the Web3 ecosystem.
