Hong Kong's New Stablecoin Regime: What Indian Start-Ups and Exchanges Need to Know

Hong Kong's New Stablecoin Regime: What Indian Start-Ups and Exchanges Need to Know - Blockchain.News

Hong Kong has moved from consultation to execution. On 21 May 2025, its Legislative Council passed the Stablecoins Ordinance, and the regime took effect on 1 August 2025. The Hong Kong Monetary Authority (HKMA) simultaneously issued a Supervisory Guideline, an AML/CFT Guideline, and licensing/transitional notes that switch the market on. At launch, the HKMA said no licences had yet been granted and it would maintain a public register once approvals begin. This is now one of Asia’s clearest, fully-fledged frameworks for fiat-referenced stablecoins (FRS).

Scope and the crucial jurisdictional twist

The law regulates issuance, redemption, offering, and marketing of fiat-pegged stablecoins. If you issue in Hong Kong, you need a licence. If you peg to the Hong Kong dollar (HKD), you also need a licence even if you issue outside Hong Kong. That extraterritorial hook is deliberate: the authorities want control over any HKD-referenced coin, wherever it’s minted. Trading venues, custodians and other crypto services are dealt with under separate rules (e.g., SFC regimes); this ordinance is squarely about issuers.

What an issuer must actually do

Three obligations define the bar. First, full backing at all times with eligible, liquid reserves—including coins that are frozen or blacklisted. Tokenised versions of eligible assets can count, but only if the issuer addresses custody, settlement and market-risk questions to the HKMA’s satisfaction. Second, par redemption within one business day for any valid request; onboarding time doesn’t count against the clock, but redemption conditions must be reasonable and not a hidden barrier. Third, reserves and operations must be organised so redemptions can be met in practice: think custody with licensed Hong Kong banks or other acceptable custodians, robust liquidity arrangements, and clear lines of responsibility with any distributors or market makers. The HKMA allows issuers to appoint those partners, but expects ongoing due diligence, conflict management and contractual controls to reduce the chance of secondary-market de-pegs.

Marketing is tightly policed. During the transition and after, only licensed FRS can be offered to retail, and promotional materials cannot imply authorisation before it is granted. In short: prudential discipline front to back, and no grey-zone advertising.

How we got here—and who is circling

The regime caps a two-year process: a 2022 discussion paper, 2023 conclusions, a December 2023 draft bill, and a sandbox that in July 2024 admitted Standard Chartered/Animoca/HKT, JD Coinlink, and RD InnoTech. By mid-2025, mainstream finance was openly preparing to apply. Standard Chartered and partners publicly flagged an intent to seek a HKD-stablecoin licence—strong signalling that large balance sheets see Hong Kong as workable. The HKMA has said it expects the first approvals in the near term, though it has not pre-cleared any applicant.

Why Indian builders should care

For an Indian start-up or exchange, the practical options are twofold. If you plan to issue a regulated USD or HKD stablecoin targeted at institutions and compliant retail, Hong Kong now offers an operational route with clear prudential, disclosure and AML expectations. The benefits are policy certainty and bank-friendliness: reserve custody with local banks, recognised redemption standards, and a supervisor that has already iterated with industry. If issuance is not your business, you can integrate a licensed Hong Kong stablecoin as your settlement leg for cross-border pay-ins/pay-outs, B2B invoices, or on-chain collateral, inheriting the issuer’s consumer-protection and AML posture without carrying the issuer’s regulatory burden. Either path is relevant for Indian companies because India itself still lacks a dedicated stablecoin framework and continues to tax crypto heavily while applying GST to platform fees; using a coin minted under Hong Kong’s rules can de-risk banking conversations and cross-border partnerships.

Readiness—what to solve before you engage

Treat reserves as a product. You’ll need a defensible asset mix, independent attestations, and documented draw-down mechanics for stress redemptions. Design onboarding so that “valid redemption request” is unambiguous and operationally meets the T+1 expectation. Paper your distribution and market-making with enforceable oversight, and be precise in advertising—no “licensed” language until the licence lands. Finally, expect continuous AML/CFT monitoring, sanctions controls, and incident-reporting obligations that look more like banking than start-up crypto.

What this regime is not

It is not a blanket legalisation of all crypto activity. Algorithmic designs are out of scope; the focus is fiat-referenced coins with par redemption and robust reserves. It is not a shortcut for trading venues or DeFi protocols; those still require separate authorisations. And it is not a rubber stamp: the HKMA emphasises substance over branding, which means higher costs and scrutiny in exchange for legitimacy.

Bottom line: Hong Kong has turned stablecoin policy into operational law. For Indian founders, that’s a chance to either issue under a bank-grade supervisor or integrate a licensed coin to power cross-border flows—with fewer compliance ambiguities and a clearer story for partners and regulators.

Sources: Hong Kong Monetary Authority — Government welcomes passage of the Stablecoins Bill (press release, May 21, 2025), Hong Kong Monetary Authority — Implementation of regulatory regime for stablecoin issuers; Supervisory & AML/CFT Guidelines released; regime effective Aug 1, 2025 (press release, July 29, 2025), HKMA — Regulatory Regime for Stablecoin Issuers (landing page with guideline links and public register), HKMA — Guideline on Anti-Money Laundering and Counter-Financing of Terrorism for Licensed Stablecoin Issuers (PDF), HKMA — Stablecoin issuer sandbox participants (press release, July 18, 2024) listing Standard Chartered/Animoca/HKT, JD Coinlink, RD InnoTech, Reuters — Standard Chartered forms JV to issue stablecoins in Hong Kong (Aug 8, 2025), Reuters — First Hong Kong stablecoin licences may be issued early next year, HKMA says (July 29, 2025), Reuters — Ant unit plans to apply for stablecoin issuer license in Hong Kong (June 12, 2025), Mayer Brown — Hong Kong’s Stablecoin Bill: Key Amendments and Next Steps Following Legislative Passage (client note, July 25, 2025), Seyfarth Shaw — Recent Passing of Hong Kong Stablecoins Bill (client note, May 23, 2025), Animoca Brands — announcement on joining the HKMA stablecoin sandbox with Standard Chartered and HKT (July 18, 2024), CoinDesk — coverage of HKMA sandbox participants (July 18, 2024).

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