The Hong Kong Monetary Authority (HKMA) has reaffirmed its commitment to ensuring the robust and sustainable development of stablecoins in Hong Kong, ahead of the commencement of the Stablecoins Ordinance on 1 August 2025.

Eddie Yue, Chief Executive of the HKMA, addressed recent developments in the market and expressed concern over increasing speculative activity and overly idealistic expectations surrounding stablecoins.

While acknowledging the public’s interest, Yue emphasised the need to manage risks and ensure proposals are grounded in practical application.

“Some recent phenomena warrant our attention,”

said Yue, referring to the growing number of institutions engaging with the HKMA regarding stablecoin-related activities.

He noted that many of these engagements have yet to produce viable use cases, clear implementation plans or demonstrate the ability to manage associated risks.

“It will be more practical for these institutions to collaborate with other stablecoin issuers by defining use cases, rather than seeking to become an issuer themselves,”

he said.

Yue also pointed to recent market behaviour where announcements related to digital assets or stablecoin activities have triggered significant increases in share prices and trading volumes.

He reminded the public that only a small number of issuer licenses will be granted initially.

“Investors should remain calm and exercise independent judgement when processing ‘positive’ market news,”

he said.

The HKMA also expressed concern over fraudulent activities linked to digital assets and stablecoins, which have resulted in public losses.

Yue reiterated that from 1 August, it will be an offence for any person to offer unlicensed fiat-referenced stablecoins to retail investors or to market them to the public in Hong Kong.

He urged the public to remain alert and ensure compliance with the new regulatory framework.

On regulatory priorities, Yue underlined the importance of guarding against financial crime.

He noted that international authorities, including the Bank for International Settlements, have raised concerns over the potential use of stablecoins in money laundering, particularly across borders.

In response, the HKMA will introduce stricter requirements in relation to anti-money laundering measures.

These form part of two regulatory guidelines, currently being finalised following consultation, which are expected to be published by the end of July.

“Regulation is an art of balancing divergent objectives,”

Yue said.

“It is better for regulated stablecoin business, which is still in its infancy, to start with stricter regulations to ensure sound operation.”

The HKMA will publish an Explanatory Note on the Licensing of Stablecoin Issuers next week.

This will set out the arrangements for accepting and processing license applications.

Featured image credit: Edited by Fintech News Hong Kong, based on image by Jubayer69 via Freepik