For the first time, the total market capitalization of stablecoins has surged past $250 billion, marking an inflection point for the crypto sector and highlighting their rising credibility among retail and instiutional players. Just as global confidence in stable digital assets gains momentum, Hong Kong has taken a decisive regulatory leap by passing its long-awaited Stablecoins Bill on May 21.
The legislation introduces one of the world’s most comprehensive regimes for governing the issuance, marketing, and distribution of fiat-pegged tokens. By mandating rigorous compliance and due diligence standards for issuers, the city aims to position itself as a global benchmark-setter in the race to regulate stablecoins.
Companies that were admitted to a sandbox for stablecoin trials include, Jingdong Coinlink Technology, a subsidiary of JD.com, which aims to build “a global, efficient, reliable and stable payment infrastructure,” according to its website.
Other sandbox participants include RD InnoTech, a local start-up founded by former Hong Kong central banker Norman Chan Tak-lam, as well as Standard Chartered’s Hong Kong arm, Animoca Brands, and Hong Kong Telecommunications. In February, the three announced plans for a joint venture to apply for a stablecoin license.
Talking to CryptoNews, Viven Wong, partner at Hashkey Capital, noted that there is a long queue of potential issuers who want to obtain a stablecoin licence in Hong Kong.
“Hong Kong especially wants to set a high bar with the first batch of stablecoin issuers. That’s why the HKMA is demanding that issuers hold substantial cash reserves. They want only the most robust firms in the first batch. The regulations are being set up carefully, and once in place, more issuers will line up. Over a dozen companies are in discussions with the government about potentially launching stablecoin here.”
Wong said the chosen issuers align with the government’s goal of ecosystem-wide adoption, starting with a HKD-backed stablecoin. She added that these companies are mostly large conglomerates with established ecosystems, making them well-positioned to integrate stablecoin usage across various platforms.
What Hong Kong’s New Stablecoin Regulations Actually Require?
Hong Kong’s stablecoin framework lays out stringent reserve asset management requirements to ensure financial stability and user protection. Issuers must maintain full backing with high-quality, highly liquid assets such as short-term bank deposits and government securities, with no deductions for custodian fees. Reserve assets must generally be in the same currency as the stablecoin, with limited exceptions allowed under strict risk controls. Assets must be segregated from the issuer’s own funds and protected from creditor claims.
Further, issuers are barred from paying interest on stablecoins, though non-interest incentives are allowed. Regular disclosures, third-party audits, and immediate reporting of any discrepancies to the HKMA are mandatory, reinforcing transparency and oversight.
Stablecoin Regulations Could Facilitate Innovation in Cross-Border Payments
Out of $250 billion in total stablecoin supply, a massive $245.5 billion is backed by the U.S. dollar, according to CoinGecko data. Tether’s USDT leads the market with over $153 billion in capitalization, followed by Circle’s USDC at $60.9 billion. In a space overwhelmingly dominated by USD-backed tokens, a Hong Kong dollar–backed stablecoin would give the city a competitive edge in cross-border payments and trade finance. It could also drive innovation in trade finance, offering businesses in Hong Kong a localized alternative within the global digital asset ecosystem. Viven explained:
“Stablecoins regulations could especially benefit SMEs in Hong Kong that need to settle international payments more efficiently. We also see potential for greater use in trade finance and streamlining remittances across the Greater Bay Area. A HKD-pegged stablecoin could greatly enhance cross-border payments, while a future RMB-pegged stablecoin might help integrate Hong Kong more closely with southern China.”
Source: CoingeckoThe three major firms accepted into the HKMA’s stablecoin sandbox are expected to receive licenses and launch stablecoins later this year. Viven noted that the initial launches will likely be backed by the Hong Kong dollar, with USD- and RMB-backed stablecoins to follow at a later stage.
Standard Chartered analysts project that the global stablecoin supply could surge nearly tenfold to $2 trillion by the end of 2028, spurred by anticipated U.S. legislation that would bring regulatory clarity to the sector. Such explosive growth would have significant implications for global capital flows, particularly in the demand for U.S. Treasuries, as stablecoins are typically backed by government debt. It could also strengthen the U.S. dollar’s dominance within the digital asset ecosystem.
Hong Kong’s Stablecoin Framework as a Global Test Case
The U.S. is advancing the GENIUS Act, aiming to create a comprehensive federal framework for stablecoins, which is expected to face a Senate vote this week. Meanwhile, Hong Kong has already taken the lead by passing its stablecoin regulations bill.
“There’s growing interest from Europe, where regulators are exploring similar frameworks and stablecoin mandates,” said Vivien Wong. “Major stablecoin firms are closely watching Hong Kong’s regulatory clarity and assessing the market potential. Their ongoing due diligence shows the global significance of Hong Kong’s stablecoin regulations.”
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