The stablecoin sector is making headlines as Hong Kong’s landmark Stablecoin Ordinance officially came into force, triggering a wave of optimism across financial and technology markets. On June 3, the first trading day after the Dragon Boat Festival holiday, stablecoin-related stocks in mainland China surged, with shares of G&D, Hengbao, Cuiwei, and Hailianjinhu soaring to their daily trading limits. Companies including SiFangJingChuang, Xiongdi Technology, Zhongke Jincai, LAKALA, and Tianyang Technology also saw significant gains.
This market momentum follows the formal enactment of Hong Kong’s Stablecoin Ordinance, published in the Gazette on May 30. The legislation establishes Asia-Pacific’s first licensing regime for fiat-backed stablecoins, marking a pivotal step in bridging traditional finance with the digital asset ecosystem.
What Are Stablecoins?
Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to reserve assets such as fiat currencies (e.g., USD, HKD), commodities, or other financial instruments. Initially developed for use within decentralized finance (DeFi) and crypto trading environments, stablecoins have increasingly expanded into mainstream financial applications.
Their key advantages—low transaction costs, fast settlement times, price stability, and seamless integration with blockchain networks—make them ideal for cross-border payments, foreign exchange reserves, and digital asset management. As a critical infrastructure component linking traditional finance and Web3 ecosystems, stablecoins are gaining strategic importance globally.
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Hong Kong’s Regulatory Milestone
The introduction of the Stablecoin Ordinance positions Hong Kong as a pioneer in digital finance regulation. Under the new rules:
- Any entity issuing fiat-backed stablecoins in Hong Kong—or issuing tokens pegged to the Hong Kong dollar anywhere—must obtain a license from the Hong Kong Monetary Authority (HKMA).
- Only licensed issuers can offer stablecoins to retail investors.
- Sales to the public are restricted to designated licensed institutions, enhancing investor protection and market integrity.
This regulatory clarity aims to foster innovation while minimizing risks related to financial stability, money laundering, and consumer protection. By creating a secure and transparent environment, Hong Kong strengthens its role as a global hub for fintech and digital asset innovation.
Prior to the ordinance’s implementation, five companies were already admitted into the HKMA’s stablecoin issuer sandbox on July 18, 2024: JD Blockchain Tech (Hong Kong) Limited, Oval Coins Innovation Technology Limited, Standard Chartered Bank, Anchain Group, and Hong Kong Telecom. These early participants are expected to play a leading role in shaping compliant stablecoin solutions.
Strategic Implications for Real-World Assets (RWA)
One of the most promising applications of stablecoins lies in tokenizing real-world assets (RWAs), such as real estate, bonds, or supply chain receivables. According to a research report by Citic Securities, stablecoins offer a reliable settlement layer for RWA transactions, improving liquidity and enabling fractional ownership.
The new regulatory framework is expected to accelerate RWA initiatives by mainland Chinese enterprises in Hong Kong. Firms with experience in digital currency cross-border settlement, central bank digital currency (CBDC) integration, or supply chain finance are particularly well-positioned to benefit.
For example, companies involved in financial IT infrastructure—especially those with prior exposure to digital renminbi (e-CNY) projects—could see increased demand for their services as banks and fintechs upgrade systems to support regulated stablecoin operations.
Market Response and Investment Outlook
The immediate market reaction underscores investor confidence in the long-term potential of regulated stablecoins. While direct stablecoin operations remain limited in mainland China’s capital markets, interest among listed companies is growing.
Over 30 inquiries about stablecoin-related strategies have been posted on investor interaction platforms, reflecting rising corporate curiosity. Some firms have already taken concrete steps toward involvement.
For instance, EternalTrust Cybersecurity revealed that it signed a memorandum of understanding with Cyberport Hong Kong on January 23, 2024. As one of the first mainland data and cybersecurity firms invited into the program, EternalTrust is expanding its presence in Hong Kong’s digital economy ecosystem.
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Frequently Asked Questions (FAQ)
Q: What is a fiat-backed stablecoin?
A: A fiat-backed stablecoin is a digital currency pegged 1:1 to a traditional currency like the US dollar or Hong Kong dollar. It is backed by reserves held by the issuer, ensuring price stability and redeemability.
Q: Why does Hong Kong’s Stablecoin Ordinance matter globally?
A: As the first comprehensive licensing regime for stablecoins in the Asia-Pacific region, it sets a precedent for balanced regulation—supporting innovation while safeguarding financial stability. Other jurisdictions may follow suit.
Q: Can mainland Chinese companies issue stablecoins under this law?
A: Yes, if they operate in or target the Hong Kong market and meet licensing requirements set by the HKMA. The law applies to any entity issuing HKD-pegged tokens globally.
Q: How do stablecoins enhance cross-border payments?
A: They reduce reliance on correspondent banking networks, enabling near-instant settlements at lower costs compared to traditional wire transfers—especially beneficial for trade finance and remittances.
Q: Are stablecoins safe for retail investors?
A: Under Hong Kong’s new rules, only licensed issuers can sell to retail users, and strict reserve-holding and auditing requirements help ensure transparency and reduce risk.
Q: What role do tech providers play in the stablecoin ecosystem?
A: Blockchain developers, cybersecurity firms, compliance solutions providers, and payment gateways all form critical parts of the infrastructure that supports secure and scalable stablecoin operations.
Future Outlook and Industry Opportunities
While mainland China's engagement with stablecoin initiatives remains cautious and exploratory, Hong Kong’s regulatory advancement opens doors for collaboration. Financial IT providers, payment solution developers, and RWA-focused innovators are likely to see growing opportunities.
As global demand for efficient, transparent, and interoperable financial systems rises, stablecoins—backed by sound regulation—are poised to become foundational tools in modern finance. The convergence of blockchain technology with regulated monetary policy could redefine how value moves across borders.
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Core Keywords
- Stablecoin legislation
- Hong Kong Stablecoin Ordinance
- Fiat-backed stablecoin
- Real-world assets (RWA)
- Digital currency regulation
- Cross-border payments
- Blockchain financial infrastructure
- Crypto market trends
With clear rules now in place, Hong Kong has laid the groundwork for a trusted, innovative digital asset market—one that could influence financial evolution far beyond its borders.