Core Viewpoint - Stablecoins are reshaping the underlying logic of cross-border payments and asset transactions, serving as a "digital anchor" that connects traditional finance with digital assets, particularly in Hong Kong's strategy to become a global innovation center in the digital asset space [1] Regulatory Framework Development - Since 2022, Hong Kong has initiated a systematic exploration of stablecoin regulation, moving from legislative preparation to sandbox trials, and establishing a regulatory framework focused on the core value of "trust" [1] - The Hong Kong Monetary Authority (HKMA) recognized the dual impact of stablecoins on financial stability and innovation, aiming to balance these aspects in its regulatory approach [2] - In December 2023, HKMA proposed that issuers of fiat-backed stablecoins must apply for a license, with only licensed issuers allowed to sell to retail investors [3] Legislative Progress - 2024 is a pivotal year for Hong Kong's stablecoin regulation, with the HKMA and the Financial Services and the Treasury Bureau set to release a consultation report that establishes design principles for the regulatory framework [4] - The consultation received 108 submissions, indicating broad support for introducing regulatory measures for fiat stablecoin issuers to manage potential monetary and financial stability risks [4] - The legislative process accelerated in December 2024 with the publication of the Stablecoin Regulation Draft, which outlines licensing requirements, reserve asset standards, and risk protection mechanisms [6] Implementation and Market Response - The Stablecoin Regulation was officially passed by the Hong Kong Legislative Council on May 21, 2025, marking the introduction of a licensing system for fiat stablecoin issuers [8] - The HKMA has maintained a cautious stance amidst market enthusiasm, emphasizing that stablecoins are payment tools without appreciation potential, and warning against speculative behavior [9][10] - Initial licensing will be limited, with expectations that only a few licenses will be granted, reflecting a stringent regulatory environment [11]