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The Hong Kong Monetary Authority (HKMA) will implement a six-month transition period with special rules as part of its new framework for stablecoins, which is set to take effect on Friday. According to a Wednesday report by local news outlet Radio Television Hong Kong, the HKMA will introduce a six-month transitional arrangement as the new stablecoin framework becomes active. The provisional rules also include the issuance of temporary licenses to issuers capable of complying with regulatory requirements. However, if a Hong Kong stablecoin issuer fails to comply with the new rules within three months, they will be required to wind down their operations within four months. Issuers that the HKMA believes cannot comply with the new rules will be forced to cease operations within a single month of receiving their notice, the report said. The HKMA said it will issue the first round of licenses at an undisclosed time, but emphasized that only a limited number will be granted initially. It also noted that it will not reveal the names of applicants. Hong Kong Monetary Authority building entrance. Source: WikiMedia Related: Chinese blockchain Conflux launching offshore yuan-backed stablecoin Hong Kong’s new stablecoin regime The framework includes strict requirements for stablecoin issuers, including full backing with high-quality liquid reserves, redemption processing within one business day and maintaining a physical presence in Hong Kong. Issuers must also have adequate financial resources. Additional mandates include Know Your Customer procedures, wallet ownership verification, ongoing transaction monitoring and blacklisting of high-risk wallet addresses. The HKMA will have the authority to investigate suspected noncompliance. Enforcement actions may include fines, public warnings, license suspension or revocation, as well as referrals to law enforcement. The new regulations come amid plans to criminalize unlicensed stablecoin promotion in the region. Related: Hong Kong prepares third batch of tokenized bonds, eyes more…

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Filed under: News - @ July 31, 2025 12:25 am