Hong Kong Stablecoin Bill Passed: Analysis of the 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 Regulation Draft," becoming the world's first jurisdiction to establish a comprehensive regulatory framework for fiat stablecoins. This legislative action provides a clear legal framework for Hong Kong's Virtual Money industry while seeking a balance between financial innovation and risk prevention, having a profound impact on the development of the Virtual Money industry in Hong Kong and mainland China. 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) Consolidate the global digital asset center position

The passage of the "Stablecoin Regulation Draft" further strengthens Hong Kong's leadership position in the global digital asset market. The bill specifies regulatory requirements for stablecoin issuers, including a registration capital threshold of HKD 25 million, a 1:1 reserve asset backing for issued amounts, and mandatory guarantees for unconditional redemption rights. These strict and 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 swiftly release regulatory guidelines after the bill is passed and open license applications by the end of 2025. This will attract numerous financial 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 technology 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 businesses to innovate technologically within a regulatory framework. For example, a large e-commerce group has entered the stablecoin "sandbox" testing phase in Hong Kong, demonstrating the company's confidence in the Hong Kong market. This "regulatory sandbox" mechanism allows companies to test innovative products in a controlled environment, reducing the compliance costs for startups while providing space 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 with their legalization. The Hong Kong government has been laying out virtual asset regulations since 2022, initiating 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 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 higher security guarantees. For example, the mandatory 1:1 reserve asset requirement and unconditional redemption rights can effectively prevent stablecoin decoupling risks and enhance market trust in stablecoins.

In addition, Hong Kong's regulatory framework seeks to balance 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. For example, a certain bank has taken the lead in launching virtual money trading services, supporting Bitcoin and Ethereum transactions, and may further expand to stablecoin trading in the future. This pioneering demonstration effect will encourage more financial institutions to enter the virtual money market, expanding Hong Kong's investor base.

(4) Promote cross-border payment and financial connectivity

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 HKD stablecoins. The launch of HKD stablecoins will optimize financial connectivity between Hong Kong and other regions in Asia, especially in the context of the "Belt and Road" initiative and the construction of the Guangdong-Hong Kong-Macao Greater Bay Area. For example, HKD stablecoins can be used for cross-border e-commerce, trade settlement, and supply chain finance, reducing transaction costs and improving settlement efficiency. This not only helps Hong Kong consolidate its status as a global trade center but also provides local enterprises with more digital financial tools.

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 passage of the Hong Kong "Stablecoin Regulation Draft" provides a regulatory model for the mainland to reference. Hong Kong's regulatory framework emphasizes the balance of 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 anchored to the Hong Kong dollar or the Renminbi). While current stablecoin regulation in Hong Kong mainly focuses on Hong Kong dollar stablecoins, its open regulatory attitude 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 Renminbi stablecoins succeed in Hong Kong, it will further promote the use of the Renminbi in global payments and settlements, aiding the process of Renminbi internationalization.

For example, the stablecoin regulatory framework in Hong Kong may provide compliant channels for mainland enterprises to issue RMB-pegged stablecoins in Hong Kong 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, increasing their competitiveness in the global market.

(3) Promote the coordinated development of fintech in the Guangdong-Hong Kong-Macao Greater Bay Area

The Guangdong-Hong Kong-Macau Greater Bay Area is an important region for the application of financial technology and blockchain technology in mainland China. Hong Kong's stablecoin legislation provides new opportunities for the collaborative development of fintech in the Greater Bay Area. For example, the Hong Kong dollar stablecoin can complement the digital renminbi, jointly serving 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 enterprises in the Greater Bay Area, attracting more mainland tech companies to enter the international market through Hong Kong.

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

(4) Indirectly Stimulating the Application of Blockchain Technology in the Region

Although the mainland maintains 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 verification. 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 application of blockchain technology under a compliant framework. For example, Hong Kong's stablecoin "sandbox" testing experience can provide technical reference for mainland enterprises, promoting the implementation of blockchain in the fintech sector.

3. Future Trend Outlook

The passage of the Hong Kong "Stablecoin Regulation Draft" marks a new phase in global stablecoin regulation. In the future, Hong Kong may become a global testing ground for non-US 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 prompt 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, financial technology cooperation between Hong Kong and the mainland will be further deepened under the framework of the Guangdong-Hong Kong-Macao Greater Bay Area, forming a model of regional collaborative development.

4. Conclusion

The passage of the Hong Kong "Stablecoin Regulation Bill" has far-reaching positive impacts on the virtual money industry in both Hong Kong and mainland China. For Hong Kong, the bill consolidates its status as a global digital asset center, 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 renminbi, the collaborative development of fintech in the Guangdong-Hong Kong-Macau 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 develops, both sides will occupy a more important position in the global digital finance field, injecting new momentum into regional economic development.