Hong Kong has unveiled plans to introduce a comprehensive stablecoin licensing regime alongside a new cryptocurrency tax reporting framework, reinforcing its ambition to position itself as a leading global hub for regulated digital assets. Authorities said legislation will be submitted this year to establish formal oversight of stablecoin issuers and digital asset custody, with implementation rolling through 2025. The framework is designed to balance innovation with financial stability, providing clearer rules for firms operating in payments, settlement, and on-chain finance. Under the proposal, stablecoin issuers operating in or targeting Hong Kong will face licensing requirements covering reserve management, redemption policies, governance standards, and operational transparency. Regulators aim to ensure stablecoins are fully backed by high-quality liquid assets and supported by robust risk controls, reflecting lessons from past market disruptions while encouraging responsible growth in blockchain-based payment systems.
The licensing regime will be overseen by the Hong Kong Monetary Authority and is expected to apply to a wide range of stablecoin models, including fiat-backed and more complex structures. Issuers will be required to maintain strong internal controls, undergo regular independent audits, and demonstrate the ability to meet redemption demands under stressed conditions. In parallel, Hong Kong plans to strengthen regulation of digital asset custody through the Securities and Futures Commission, introducing licensing standards for firms safeguarding virtual assets on behalf of clients. These rules will mandate strict asset segregation, enhanced cybersecurity measures, and insurance coverage, addressing long-standing concerns among institutional investors. Together, the stablecoin and custody frameworks are intended to create an integrated regulatory environment that supports institutional participation while reducing systemic and consumer risks in the digital asset market.
Alongside licensing reforms, Hong Kong is preparing a new crypto tax reporting framework that will come into force from 2028, aligning the city with emerging international standards on digital asset transparency. The government said the regime will enable automatic exchange of crypto-related tax information with other jurisdictions, building on global initiatives such as the OECD’s crypto asset reporting efforts. Rather than introducing new taxes, the framework focuses on clearer reporting obligations for virtual asset service providers and financial institutions, giving authorities better visibility into cross-border transactions. Officials said the phased timeline allows industry participants time to adapt systems and compliance processes. Market observers say the combined regulatory clarity on stablecoins, custody, and tax reporting could attract digital asset firms seeking predictable rules, while strengthening Hong Kong’s role as a bridge between traditional finance and on-chain payment infrastructure.
