Starting August 1, Hong Kong will enforce its new Stablecoin Ordinance, making it a criminal offence to offer or promote fiat-referenced stablecoins (FRS) to retail investors without a license.
Under the law, violators face fines of up to 50,000 Hong Kong dollars (approximately $6,300) and imprisonment for up to six months.
The Hong Kong Monetary Authority (HKMA) issued a public warning on Wednesday, urging investors to steer clear of unlicensed stablecoin products to avoid breaking the law. HKMA Chief Executive Eddie Yue explained that the regulation seeks to build credibility in the emerging stablecoin market while protecting consumers from fraud and speculative risks.
Yue noted that market hype around stablecoin announcements has led to unwarranted surges in company share prices and trading volumes, highlighting the need for stricter oversight.
“It seems necessary to further rein in the euphoria,”
he stated.
Bloomberg reported on Thursday that around 50 firms have submitted applications for stablecoin licenses. However, Yue revealed that many of these proposals remain conceptual, lacking viable implementation roadmaps and clear strategies for risk management. Only a small number of licenses are expected to be granted in the initial phase.
“They also fail to put together viable and concrete plans as well as implementation roadmaps, let alone demonstrate their awareness of risks and competence in managing them,”
Yue said.
Hong Kong’s move mirrors global efforts to regulate stablecoin markets. The European Union’s Markets in Crypto-Assets Regulation (MiCA) imposes financial penalties starting from 5 million euros ($5.8 million) or up to 12.5% of annual turnover for violations, though MiCA does not include jail terms. Meanwhile, the United Kingdom’s Financial Conduct Authority continues to face challenges enforcing its crypto ad rules, with only about half of flagged illegal ads removed as of January.
With its combination of fines and potential imprisonment, Hong Kong’s regulatory stance is among the strictest globally as the city seeks to balance fintech innovation with robust consumer protection.
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