As the U.S. debates regulating stablecoins, Hong Kong has already passed a new law that shifts the competition to lead in crypto regulation. Hong Kong’s action marks the beginning of many places working to have compliant infrastructure for digital assets. By putting stablecoin laws in place first, Hong Kong offers itself as an example for the regulated digital currency world.

Hong Kong Approves Stablecoin Bill to Strengthen Crypto Regulation

Hong Kong has passed the Stablecoin Bill to establish a legal framework for regulating fiat-referenced stablecoins. The law, introduced by the Legislative Council, aims to support the city’s growing virtual asset sector. It creates a licensing regime for institutions that issue stablecoins backed by fiat currencies.

Christopher Hui, Secretary for Financial Services and the Treasury, said the move aligns with international standards. He added that the bill supports user protection and the sustainable development of digital assets. The legislation forms part of Hong Kong’s broader strategy to promote financial innovation while maintaining regulatory oversight.

Institutional Licensing to Begin by End of 2025

According to official sources, institutions will be allowed to apply for licenses from the Hong Kong Monetary Authority (HKMA) by the end of 2025. Hong Kong will not allow any unregulated firm to release fiat-backed stablecoins.

Stablecoin regulation is essential for Hong Kong to achieve its goal of being a major player in the global crypto market, according to Ng Kit Chuang. The government uses the same approach with all companies to ensure rules for financial services are consistent.

Risk-Based Approach to Boost Financial Safety

According to the new regulation, banking activities are based on a system that balances stability and security. Eddie Yue, Chief Executive of the HKMA, said this technique supports a more practical and adaptable regulatory environment. It is designed to help the stablecoin industry grow, but without sacrificing compliance.

This bill introduces standards for preventing money laundering, data protection, and money reserve management. It follows both the European Union’s MiCA rules and the Basel Committee’s recommendations. The same is true as more countries worldwide call for consistent surveillance of digital assets.

US Stablecoin Regulation Remains Uncertain

The United States has yet to pass a stablecoin law at the federal level. The GENIUS Act, which seeks to create a regulatory structure for stablecoins, advanced with a 66-32 procedural vote in the Senate. Nevertheless, it will need House approval before it goes to President Trump.

Even though the bill passed, the lack of federal law has delayed the U.S. process of overseeing stablecoins. People working in cryptocurrency and those who oversee it are still debating issues involving custody, reserves and what issuers have to do.

Global Context: Regulated Stablecoins on the Rise

Stablecoin adoption continues to grow worldwide. According to CoinMarketCap, the stablecoin market has recovered to a capitalization of over $160 billion. Despite USDT and USDC having the most market share, regulated alternatives in the sector are catching up.