Hong Kong stablecoin: Cross-border regulation, future outlook, and the significance of the Hong Kong model

The "Hong Kong Stablecoin Ordinance" (hereinafter referred to as the "Ordinance") is Asia's first comprehensive regulatory framework for stablecoins. This law not only reshapes Hong Kong's virtual asset regulatory landscape but also offers a unique "Eastern solution" in terms of cross-border coordination, regulatory innovation, and institutional design.

1. Cross-border Regulation and International Coordination: Penetrating Regulatory and Compliance Barriers

(1) Cross-border Issuance Regulation: "Long Arm Jurisdiction" Linked to Hong Kong Dollar

The "Regulations" innovatively establish a "cross-border regulatory trigger"—as long as the stablecoin is "partially or fully" pegged to the Hong Kong dollar (Article 5(1)(a)(ii)), it must be subject to Hong Kong regulations, regardless of whether the issuer is in Hong Kong. This design directly targets the cross-border circulation characteristics of mainstream stablecoins like USDT and USDC, avoiding regulatory arbitrage. In contrast to Singapore's Payment Services Act (PSA), which only regulates domestic activities, Hong Kong demonstrates a stronger judicial proactiveness.

(2) Overseas Entity Designation System: Regulatory Firewall

To manage offshore risks, Article 101 of the Regulation authorizes the Monetary Authority to "designate overseas stablecoin entities," requiring them to comply with Hong Kong rules (Article 107). This complements the "passport system" of the EU's Markets in Crypto-Assets Regulation (MiCA) — MiCA allows compliant entities within the EU to operate freely, while Hong Kong sets active review thresholds for overseas institutions, closer to the strict entry model of New York State's "BitLicense."

(3) Anti-Money Laundering Cross-Border Cooperation: Information Penetration Mechanism

The regulations build a three-layer defense network:

On-chain tracking: Require license holders to provide "data within the information system" (Article 127), laying the foundation for on-chain analysis.

Judicial Assistance: Allows the disclosure of cryptocurrency transaction information to "authorized public officials" (Article 158), facilitating cross-border intelligence sharing.

Joint Sanctions: Article 137 authorizes penalties against senior personnel of overseas entities, echoing the FATF "travel rule".

For example: In the case of offshore issuance similar to Tether but pegged to the Hong Kong dollar, the Monetary Authority can invoke Article 5 to require licensing and, based on Article 110, request the reserve audit report to achieve cross-border regulatory penetration.

2. Future Development and Regulatory Innovation: Sandbox and Technology-Driven Compliance Revolution

(1) The Implicit Space of Regulatory Sandboxes

Although the "Regulations" do not explicitly mention "sandbox", three major innovation interfaces are reserved:

Exemption: Article 13 authorizes the Monetary Authority to exempt certain stablecoin activities from licensing, paving the way for experimental projects.

Guideline Flexibility: Article 99 allows for adjustments to the "minimum guidelines", enabling differentiated regulation for new models such as algorithmic stablecoins.

Designated Authority: Article 4( grants the authority to the Monetary Authority to define new categories of stablecoins with flexibility to adapt to technological iterations.

(2) The Compulsory Nature of RegTech Compliance Monitoring

The regulations upgrade technological compliance from an initiative to a legal obligation:

Real-time Report: Article 27 requires licensees to automatically report "significant changes" to promote direct API connections to the regulatory system.

On-chain audit: Article 111 clearly states that the Monetary Authority has the right to examine "ledgers and accounts", covering tools such as blockchain explorers.

Reserve Penetration: Article 17)2()b( requires reserve assets to be "verifiable", presupposing the application of on-chain proof technology.

(3) Three Stages of Ecological Evolution

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) 3. The Significance of the Hong Kong Model: The Global Export of the Eastern Regulatory Paradigm

(1) Implementation of the principle of "same business, same risk, same regulation"

The "Regulations" thoroughly implement this concept:

Business Penetration: Incorporating "showing that one is engaged in regulated activities" (Article 8###2() into regulation, covering DeFi platforms.

Risk Classification: Differentiated management is set according to the type of assets anchoring the stablecoin (single currency/basket of assets) (Article 4)

Regulatory Unification: Licensed banks and non-bank institutions are subject to the same set of "minimum standards" (Appendix 2), eliminating arbitrage opportunities.

(2) The Eastern Model of Global Stablecoin Regulation

The Hong Kong plan differs from the European and American paths:

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(3) Insights on Mainland Digital Renminbi and Regulation

Cross-border scenario integration: Licensed stablecoins in Hong Kong can serve as a carrier for the offshore circulation of e-CNY, establishing a compliant channel based on Article 9's "Recognized Providers" system.

Regulatory Technology Sharing: The on-chain analysis framework in Hong Kong (Articles 116-129 investigation powers) can provide a cross-border fund monitoring template for the mainland.

Legislative Technical Reference: Hong Kong's legal definition of "distributed ledger" (Article 3)3() eliminates regulatory ambiguity under the technology-neutral principle.

) 4. Finding the Golden Balance Between Innovation and Order

The value of the "Hong Kong Stablecoin Ordinance" lies not only in its comprehensive regulatory framework—from issuance licensing (Article 14), reserve management (Article 17) to crisis management (Article 80 statutory manager)—but also in the regulatory philosophy it demonstrates: controlling systemic risks through strict access, while allowing flexibility in rules to unleash innovative vitality.

Official link to the regulations: The Stablecoin Ordinance of the Hong Kong Special Administrative Region of the People's Republic of China: