Hong Kong Passes World’s First Stablecoin Legislation, Sparks Regional Market Surge

Hong Kong has become the first jurisdiction to introduce dedicated legislation for fiat-referenced stablecoins, positioning itself as a pioneer in virtual asset regulation and aiming to cement its role as a global financial hub. The Stablecoins Ordinance, passed in late May, establishes a licensing regime for stablecoin issuers and is expected to come into effect this year, providing regulatory certainty and fostering innovation in the stablecoin ecosystem. Mainland Chinese institutions are showing strong interest in the legislation, with analysts from Citic Securities and CSC Financial predicting a surge in tokenised real-world asset (RWA) projects in Hong Kong, supported by the enhanced liquidity and stability stablecoins can provide. While Beijing has been largely silent on the move, the law is seen as a strategic part of China's broader digital finance ambitions, potentially facilitating cross-border use of the digital yuan and digital currency payment interfaces. Experts emphasize that beyond legal frameworks, Hong Kong must develop scalable, interoperable infrastructure — including settlement layers and fiat on/off-ramps — to fully realize the benefits of stablecoins, as evidenced by their practical use in emerging markets. The global regulatory focus on stablecoins is intensifying, highlighted by parallel legislative efforts such as the US Senate's Genius Act, underscoring the growing importance of these digital assets in the international financial landscape.