Hong Kong issues the first stablecoin license in March, with legislation to regulate trading firms and custodians accelerating compliance within the year

On February 25, Hong Kong Financial Secretary Paul Chan revealed in the 2026-27 fiscal budget that Hong Kong will issue the first batch of fiat-backed stablecoin licenses next month, marking the substantive implementation of the stablecoin regulatory framework. Regulators will continue to assist licensed issuers in exploring applications such as payments, cross-border settlements, and digitalization of real assets in a compliant and risk-controlled manner, strengthening Hong Kong’s institutional advantages in the digital asset regulatory system.

At the policy level, it was also confirmed that Hong Kong plans to introduce new legislation later in 2026 to establish a licensing system covering crypto asset traders and custodians. The scope of regulation will expand from platforms and stablecoins to key areas such as over-the-counter trading and custody, further improving the compliant virtual asset ecosystem. Meanwhile, the Securities and Futures Commission of Hong Kong will take measures to enhance market liquidity, expand the categories of crypto financing and derivatives products available to professional investors, and promote compliance innovation and market depth through the establishment of an innovation accelerator.

Strategically, tokenization is listed as one of the core pillars. The Hong Kong government plans to issue guidelines allowing bondholder registries to be on-chain and explore the issuance of tokenized bonds via electronic signatures, promoting practical blockchain applications in traditional financial infrastructure. Additionally, the Hong Kong Monetary Authority will continue to upgrade the EnsembleTX project, advancing pilot programs for wholesale central bank digital currencies, enabling real-time, 24/7 settlement of tokenized deposits and digital assets, and strengthening cross-border interoperability standards.

In terms of taxation and compliance, Hong Kong will revise the Tax Ordinance over the next two years to align with the OECD crypto asset reporting framework and updated common reporting standards, enhancing tax transparency and aligning with global digital asset regulation trends. As stablecoin licenses are issued, trading and custody legislation progresses, and tokenization infrastructure is built, Hong Kong is accelerating the development of a comprehensive crypto financial regulatory system covering issuance, circulation, custody, and clearing.