Bifu Research | 2026

Abstract

Following the establishment of the regulatory framework for Virtual Asset Trading Platforms (VATP), Hong Kong's digital finance ecosystem has welcomed a critical piece of the puzzle on the funding side. With the Stablecoin Issuer Regulatory Regime (hereinafter referred to as the "Ordinance") officially coming into effect on August 1, 2025, Hong Kong has taken the global lead in establishing a licensed financial status for Fiat-Reference Stablecoins (FRS). This marks the official entry of the digital asset market into a new cycle of "Digital Cash" backed by sovereign credit and rigorous auditing.

The Hong Kong stablecoin regime is not designed to stifle innovation, but to solve the crisis of trust that has plagued the industry for years by building a regulatory moat of "Full Reserve" and "Bankruptcy Remoteness." For investors, this means the funding side will possess safety comparable to commercial bank deposits—a necessary prerequisite for Mass Adoption of Web3.

I. Regulatory Implementation: Farewell to "Wild Growth"

1.Core Transformation: From Commodity to Financial Product

For a long time, the global stablecoin market has been dominated by offshore USD stablecoins. Their opaque reserve composition and lack of regulated issuance mechanisms have been a "Sword of Damocles" hanging over the industry.

The HKSAR Government has adopted a "distinctly different" regulatory path. Under the effective Ordinance, the nature of stablecoins is redefined; they are no longer mere virtual commodities but regulated financial products with payment and settlement functions. Under the new rules, all fiat stablecoin issuers promoting or issuing in Hong Kong must obtain a license from the Hong Kong Monetary Authority (HKMA). This design significantly raises the barrier to entry, stipulating that only entities with strong capital strength and incorporated in Hong Kong (including banks and non-bank institutions) may apply. This strict screening mechanism eliminates the possibility of anonymous project issuance at the source, establishing a high standard for the market.

2.The Sandbox Journey: From Experiment to Execution

Hong Kong's legislative process reflects a prudent style of "planning before acting." The HKMA launched the "Stablecoin Issuer Sandbox" as early as March 2024, with the first batch of participants including Standard Chartered Bank, RD Technologies, and JD Coinlink.

The year-long sandbox exercise was crucial. It was not just a technical test, but a stress test for business models. Regulators and participants jointly verified the robustness of stablecoin issuance and redemption processes across different application scenarios such as cross-border payments and supply chain finance. These real-world data provided a solid basis for the final implementation of the Ordinance, ensuring that regulatory policies are both safe and commercially viable.

II. Deep Dive: The "Safety Triangle" of Hong Kong Stablecoins

Compared to the EU's MiCA regulation or Singapore's framework, Hong Kong's regulatory details are known for their "stringency." Bifu Exchange summarizes this as the "Safety Triangle" system, which serves as the gold standard for evaluating stablecoin security.

1.Entry Barriers: Capital Rules and Local Entities

Regulators have set up an extremely high firewall at the entry point to ensure issuers have risk resilience. According to regulations, issuers must maintain a Minimum Paid-up Share Capital of HKD 25 million or 2% of the total stablecoins in circulation (whichever is higher) at all times. This hard indicator directly eliminates speculative teams with insufficient funds.

Furthermore, the Ordinance emphasizes the "Local Entity Requirement." Issuers must be companies incorporated in Hong Kong, and their Chief Executive and key management personnel must be based in Hong Kong. This regulation profoundly reflects the logic of effective supervision, ensuring that in the event of a risk incident, regulators can directly conduct accountability and disposal, avoiding the legal dilemma of cross-border accountability.

2.Full Reserve Mechanism

Addressing the primary concern of users regarding redemption, the Ordinance mandates that issuers must maintain at least 100% reserve assets.

Regarding asset quality, reserves must consist of high-liquidity, high-credit-rating assets, such as cash or short-term government treasury bills. This means issuers cannot invest user funds in high-risk corporate bonds or commercial paper to seek high returns, as some offshore stablecoins do. Meanwhile, issuers must regularly publish reserve asset reports attested by third-party auditors. The audit frequency is far higher than the quarterly attestations of traditional offshore stablecoins, ensuring the asset side is always under transparency.

3.Bankruptcy Remoteness and Trust Custody

This is the final line of defense for user funds. Regulations require user assets to be held in independent trust accounts, achieving strict physical segregation from the issuer's own funds.

Legally, the core significance of this design lies in ownership confirmation. Even if the issuer goes bankrupt due to poor management, general creditors have no right to touch users' reserve funds. This confirms that the assets belong to the "Coin Holders" rather than being liabilities of the issuer, completely avoiding risks similar to the misappropriation of user funds by FTX, and installing a legal "security door" for user assets.

4.The "Two Prohibitions" Principle

To maintain the overall stability of the financial system, Hong Kong regulators have clearly drawn two red lines:

First, Prohibition on Interest Payments. Stablecoin issuers are not allowed to pay interest to users. While this seemingly reduces user holding returns, the deep logic is to eliminate the motive for issuers to engage in high-risk investments to pay interest, ensuring absolute stability of the coin value.

Second, Prohibition on Algorithmic Stablecoins. Mechanisms relying solely on arbitrage algorithms to maintain the peg are explicitly banned; only fully asset-backed models are the compliant path.

5.Hong Kong Model VS Offshore Model

Why should users pay attention to Hong Kong compliant stablecoins? Through comparison, we can clearly see how "Compliance Costs" translate into "Safety Value."

III. Market Landscape: Entry of the "Regular Army" and the Payment Revolution

With the opening of the licensing system, the Hong Kong stablecoin market has bid farewell to the "Wild West" era, forming a "Regular Army" landscape dominated by traditional financial institutions and tech giants. Unlike projects driven by geek code, these issuers demonstrate strong credit backing and industrial backgrounds.

1.Key Player Profiles

• Banking Sector: Represented by Standard Chartered. As one of Hong Kong's three note-issuing banks, Standard Chartered directly participated in the HKMA's Project Ensemble architecture working group. Its strategic focus lies in leveraging its global custody network, prioritizing large-value inter-institutional settlement and tokenized asset trading, providing a compliant fiat channel for Web3 institutions.
• Tech Sector: Typified by JD Coinlink (Jingdong Coinlink). Relying on parent company JD.com's massive supply chain system and e-commerce scenarios, JD Coinlink is dedicated to solving payment pain points in cross-border trade. During the sandbox phase, it focused on verifying the real-time turnover of supply chain finance funds using stablecoins, demonstrating the huge potential of combining with the real economy.
• Payment Sector: Led by RD Technologies. Founded by Norman Chan, former Chief Executive of the HKMA, the company possesses deep regulatory understanding and financial connections. Its "RD Wallet" and HKD stablecoin (HKDR) focus on building a trust network for B2B commercial payments, aiming to reduce cross-border remittance costs for SMEs.

2.Breakthrough in Payment Scenarios

HKD stablecoins (such as HKDG, HKDA, etc.) are not merely intended to replace USDT as a trading medium but aim at broader pain points in the real economy, which constitutes their true value moat.

In the field of B2B cross-border trade settlement, companies can use compliance stablecoins to conduct 7x24-hour cross-border transfers by leveraging Hong Kong's position as an international trade center. Compared to traditional SWIFT channels, this method shortens the T + 2 remittance cycle to T + 0 (real-time arrival), significantly reduces exchange and transfer fees, and greatly improves capital turnover efficiency.

In terms of Web3 Payment Gateway, compliance stablecoins are breaking down the barriers between real consumption and on-chain assets. Users can directly use stablecoins to purchase services at supported merchants without frequent fiat currency deposits and withdrawals. This seamless experience is a key step for Web3 to become popular.

IV. Conclusion

The establishment of the Hong Kong stablecoin regime is essentially installing a "braking system" and "airbags" on the fast-moving Web3 race car. This may seem to slow it down, but in reality, it allows the car to navigate more complex road conditions and travel further and more steadily.

As global regulations close in on unregulated offshore stablecoins (e.g., EU's MiCA regulation), capital risk aversion is heating up. The future market belongs to assets and platforms that embrace regulation and high transparency. For Bifu Exchange and its users, we no longer need to gamble in a "black box" full of uncertainty. Under the sunlight of the system, every flow of funds will be traceable, and every redemption will be legally backed. This is not only a victory for Hong Kong FinTech but also a victory for every investor pursuing asset safety.

References

To ensure the accuracy and timeliness of information, the regulatory framework details cited in this article are based on official documents from relevant Hong Kong regulatory bodies. for in-depth research, please visit:

Financial Services and the Treasury Bureau & HKMA (2024)：

https://www.hkma.gov.hk/media/chi/doc/key-information/press-release/2024/20240717c3a1.pdf

HKMA (2024)：

https://www.hkma.gov.hk/chi/news-and-media/press-releases/2024/07/20240718-4/

HKMA (2025)：

https://www.hkma.gov.hk/gb_chi/key-functions/international-financial-centre/stablecoin-issuers/

Disclaimer

This report is prepared by the Bifu Research Institute for informational purposes only and does not constitute investment advice, legal opinion, or endorsement of any specific asset. The digital asset market is highly volatile and risky; past performance is not indicative of future returns. Users should fully assess risks and consult professional advisors before investing.

Policy interpretations in this report are based on the regulatory environment at the time of publication. As local laws and regulations may update and adjust over time, please always refer to the latest documents published by official regulatory bodies for specific compliance requirements. Bifu assumes no legal liability for any decisions made based on this report.