Hong Kong Takes the Lead with Stablecoin Ordinance

Hong Kong's Legislative Council has passed the Stablecoin Ordinance, effective August 1, 2025, establishing a comprehensive regulatory framework for fiat-backed stablecoins. This ordinance requires issuers to obtain licenses, maintain 1:1 reserves, and comply with AML/KYC standards. The move positions Hong Kong as a leader in digital finance, potentially benefiting stocks like JD.com, Standard Chartered, and LianLian Digital. However, investors should be cautious of policy uncertainties and market competition as the stablecoin landscape evolves.

Introduction: A Regulatory Milestone for Digital Finance

TradingKey - In May 2025, Hong Kong’s Legislative Council passed and gazetted the Stablecoin Ordinance, which will officially take effect on August 1. As the world’s first full-spectrum regulatory framework for fiat-backed stablecoins, this move not only boosts market confidence but also introduces a new investment theme to the Hong Kong stock market: stablecoin-linked equities.

This article breaks down the ordinance’s key provisions, highlights potential beneficiaries in the stock market, and explores future opportunities.

Key Provisions of Hong Kong’s Stablecoin Ordinance

Passed on May 30, 2025, the ordinance outlines the following requirements:

- Licensing: All entities issuing or selling fiat-backed stablecoins in Hong Kong must obtain a license.

- Reserve Assets: Issuers must maintain a 1:1 reserve in high-liquidity assets (e.g., cash or short-term government bonds).

- Asset Segregation: Reserves must be independently custodied and separated from company funds.

- Redemption Rights: Holders must be able to redeem stablecoins at face value under reasonable conditions.

- AML & Risk Controls: Issuers must comply with AML/KYC, auditing, and disclosure standards.

This framework gives Hong Kong a first-mover advantage over the U.S. GENIUS Act, positioning the city as a global hub for virtual assets and encouraging integration of stablecoins into real-world use cases like cross-border trade and payments.

Global Policy Momentum: GENIUS Act & Korea’s Digital Asset Basic Act

Following Hong Kong’s lead, the U.S. Senate passed the GENIUS Act on June 17, which now awaits a House vote and President Trump’s signature. Senator Hagerty has stated that Trump is ready to sign the bill once it reaches his desk.

Meanwhile, on June 10, South Korea’s ruling Democratic Party introduced the Digital Asset Basic Act, allowing companies with ₩500 million ($370,000) in capital and adequate reserves to issue stablecoins. Kakao has already announced plans to launch a KRW-backed stablecoin, according to the Seoul Economic Daily.

This regulatory race among Hong Kong, the U.S., and South Korea is expected to attract talent and capital, fostering a competitive but constructive environment for stablecoin innovation. Other regions like Japan and the EU may soon follow suit.

Stablecoin-Linked Stocks: Who Stands to Gain?

Company	Ticker	Stablecoin Exposure
JD.com-SW	09618.HK	Subsidiary JD Chain plans to issue HKD stablecoin
Standard Chartered	02888.HK	JV with Ant Group and HKT to apply for HKD stablecoin license
LianLian Digital	02598.HK	Digital payments and stablecoin clearing
Linklogis	09959.HK	Blockchain-based supply chain finance
Yeahka	09923.HK	Digital payments and virtual asset integration
Everbright Holdings	00165.HK	Investor in Circle, issuer of USDC
ZhongAn Online	06060.HK	Parent of ZA Bank, potential stablecoin reserve bank
OSL Group	00863.HK	Licensed crypto exchange with stablecoin infrastructure

Investment Strategy: How to Position

- Short-Term Plays: JD.com and Standard Chartered could benefit directly if granted stablecoin licenses. Monitor regulatory updates closely.

- Mid-Term Opportunities: OSL Group, as Hong Kong’s only listed and licensed crypto exchange, may become a key stablecoin custodian and distributor.

- Long-Term Exposure: LianLian Digital and Linklogis offer indirect exposure through payment and blockchain infrastructure. Their relevance may grow as stablecoin adoption scales.

Note: These classifications are dynamic and should be adjusted based on regulatory developments and company disclosures.

Risks to Watch

Risk Type	Description
Policy Uncertainty	Licensing details and implementation timelines remain unclear.
Valuation Risk	Some stocks may be overhyped relative to fundamentals.
Execution Risk	Stablecoin applications are still nascent — commercial viability is not guaranteed.
Regulatory Shifts	Future policy tightening or cross-border conflicts could disrupt progress.
Market Competition	The space is crowded — only well-capitalized players may survive.

Investors should prioritize companies directly tied to issuance or reserve services, avoid speculative hype, and diversify across multiple names to manage risk.

Conclusion

The implementation of Hong Kong’s Stablecoin Ordinance marks a turning point for digital finance, offering both regulatory clarity and investment opportunity. As the ecosystem matures, well-positioned companies could thrive — but only if they navigate the evolving landscape with agility and compliance.

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