The government of the Hong Kong Special Administrative Region published the Stablecoins Ordinance (Commencement) Notice on Friday to designate Aug 1 as the commencement date for the Stablecoins Ordinance (Cap. 656) to come into operation.

The ordinance, gazetted on May 30, is to supervise activities involving stablecoins, and to introduce a licensing regime for regulated stablecoin activities in Hong Kong.

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"After the ordinance commences operation, the licensing regime will provide suitable guardrails for relevant stablecoin activities. It will be a milestone in facilitating the sustainable development of the stablecoin and digital asset ecosystem in Hong Kong,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said in a government statement.

The Hong Kong Monetary Authority has launched a consultation on the detailed regulatory requirements of the regime, including provisions related to anti-money laundering and the counter-financing of terrorism.

The notice will be tabled before the Legislative Council on June 11 for negative vetting.

Under the ordinance, the relevant persons involved in stablecoin activities in Hong Kong must satisfy requirements in areas such as reserve asset management and redemption, including proper segregation of client assets, maintaining a robust stabilization mechanism, and processing stablecoin holders’ requests for redemption at par value with reasonable conditions.

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They must also comply with other requirements, including those on anti-money laundering and counterterrorist financing, risk management, disclosure and auditing, as well as fitness and propriety.

A transitional arrangement will be provided to facilitate the industry in applying for a license and making suitable business arrangements in accordance with the regulatory regime.