History so far: Hong Kong takes a decisive step forward in the regulations of certain types of cryptocurrencies, while he is preparing to enforce the stablecoins order from August 1. The new regulations take place in the midst of an explosion of interest in stablescoins and their promising applications both in personal finance and in international affairs. While crypto users who support official regulations are excited, the authorities have advised caution.
What is the new Stablecoin license system in Hong Kong?
Hong Kong Monetary Authority has announced that the Stablecoins order will come into force on August 1 of this year. This means that it will be illegal for people “to offer a stablecoin (FRS) referenced by a FIAT not license to a retail investor, or to actively market the question of FR not licensed to the public of Hong Kong”, according to Eddie Yue, Director General of HKMA.
In addition, companies wishing to legally issue stablescoins to Hong Kong users will have to obtain a license in monetary authority and meet the defined requirements when it comes to managing reserve and buy -back assets, stabilization of assets and the processing of user requests. In addition to this, they will have to comply with the applicable regulations which prevent money laundering and terrorist funding, ensuring that their assets are properly disclosed and verified.
The HKMA has warned that regulations are not a red carpet for interested parties to start delivering stablescoins, and that at the beginning, it “would mostly grant a handful of stabing transmitter licenses. In other words, a large number of candidates will be disappointed, ”said Yue in an official press release.
What are Stablecoins?
Stablecoins are a class of cryptocurrencies, with their values related to assets. Unlike better known cryptocurrency parts such as Bitcoin (BTC) and ether (ETH) or even tokens such as Shiba Inu (Shiba), whose values can increase and decrease due to investors and other factors feelings, Stablecoins are designed to maintain relatively stable prices. Therefore, their name.
This so-called stability is obtained thanks to the “jump” process, the ecupon with an asset such as fiduciary currency (such as US dollars, EU euros, Hong Kong dollars, etc.), goods (like gold), other cryptocurrencies (like Bitcoin), by regulating their value via computer algorithms, or by mixing several multiple strategies. Although the price of Bitcoin can increase or drop in the coming years, a USD stablecoin should ideally remain around $ 1.
Stablecoins are different from CBDCs, or digital currencies from the Central Bank, which are digital currencies officially issued and controlled by the Central Bank of the Government. Meanwhile, stablecoins can be emitted in private and can also be fixed in foreign currencies.
Why do Stablecoins require regulation?
Stablecoins play an important role inside and outside the cryptography ecosystem, even if they may not have a price for Bitcoin. Cryptographic investors often use stablecoins to facilitate easy exchanges on crypto exchanges. Others in the world have used stablecoins to maintain the value of their savings when their indigenous currencies are depreciated or to save money on cross -border transactions. Argentina, Turkey and even the Taliban, Afghanistan, are places where stablecoins are not only for trading, but a way to make everyday life possible.
The figures also tell a convincing story. TETHER (USDT), the fourth largest cryptocurrency by market capitalization and the largest stablecoin, by CoinmarketCap, has a circulating offer of 163.75 billion USDT. Meanwhile, more than $ 250 billion in Stablecoins studies are estimated in circulation worldwide.
Naturally, more governments are concerned about whether the highly modified use of stalls could one day affect the value of fiduciary currencies or original raw materials. In addition, what is the guarantee that each stablecoin set for the dollar, the euro, the pound or the peso is really supported by its transmitter? Currently, it is largely up to Stablecoin users to audit the reserves of their transmitters and ensure that their stablecoins are sufficiently supported. When a Stablecoin transmitter suddenly adds millions of dollars in assets, it naturally raises questions from where money to support, or if it really exists. This is where the regulations come into play.
Do Stablecoins present volatility despite having been set to currencies?
Despite their name and support, Stablecoins can also be volatility. In response to both technical factors and global events, Stablecoins are sometimes not caught and their prices can increase or fall beyond the usual range, sudden declines triggering panic among investors. For example, the USDT, which is set to the US dollar, has dropped in the past at prices as low as about $ 0.92.
The Stablecoins have also collapsed. In May 2022, the Terra, Luna cryptocurrency, Luna and its linked algorithmic shield, both lost most of their value in a few hours. Panicked investors who no longer trusted these assets quickly sold them to minimize losses, and prices approached zero. Billions of dollars have been suffered from the cryptography sector and the liquidity cream that has followed assets through global cryptography exchanges and Fintech platforms.
Have other countries began to regulate stablecoins?
US President Donald Trump signed the engineering law designed to regulate stablecoins and protect the US dollar in July to the delight of his pro-scriptto supporters.
According to the White House, the law on engineering requires 100% reserve support with liquid assets such as US dollars or short -term treasure bills for stablecoins. Those who publish this asset will also have to make public monthly disclosure of the composition of their reserves, in addition to respecting marketing rules.
The other countries that have started to regulate stablecoins include Japan and Singapore, by AFP, while several other jurisdictions have more generic regulations that cover stablecoins as well as other cryptocurrencies.
Although the Chinese government strongly restricts the activities related to crypto in its jurisdiction, some of the country’s technology giants hope that the next Hong Kong regulatory regime will provide a outlet for their own stablecoin companies.
Published – August 02, 2025 07:59
