Stablecoin Regulation: Hong Kong Issues Latest Licensing and AML Guidelines

Key Insights:

• HMKA has released robust licensing and AML guidelines for stablecoin issuers operating in Hong Kong.
• The new guides follow the recently adopted GENIUS Act in the U.S. and the EU’s MiCA regulation.
• These regulations promote innovation by providing a clear path for stablecoin issuers.

The Hong Kong Monetary Authority (HKMA) has released updated licensing and anti-money laundering (AML) guidelines for stablecoin issuers. These guidelines are designed to regulate stablecoin issuance, aligning with international standards for combating money laundering and terrorist financing.

HKMA Unveils Licensing Guidelines

As revealed in a press release, the updated stablecoin licensing guidelines will take effect from August 1, 2025. It establishes a licensing regime for fiat-referenced stablecoin (FRS) issuers under the HKMA.

The new framework includes requirements for proper reserve backing, redemption mechanisms, risk management, and robust AML controls.

The HKMA released two sets of guidelines earlier today, July 29, 2025. The first one, “Supervisory Guidelines for Licensed Stablecoin Issuers”, outlines supervisory expectations for stablecoin issuers.

Under this guideline, licensees are required to carry out customer due diligence

measures on specified stablecoin holders before issuance and redemption. They are also required to put in place risk indicators for monitoring the liquidity profile of the reserve assets.

The second guideline addresses concerns in a consultation document issued by the HKMA on 26 May 2025.

A paragraph in the updated AML/CFT guideline explains that licensees, unlike traditional financial institutions may or may not provide custodial services to their stablecoin holders.

Rather, holders will have to use wallets provided by custodial wallet providers if the licensees do not provide such services.

The Travel Rule is another key requirement under the updated AML/CFT guidelines. It requires the sharing of originator and beneficiary information during digital asset transfers.

Stablecoin Regulation: GENIUS Act and MiCA in Retrospect

Notably, the updated HMKA licensing guidelines follow the signing of the GENIUS Act into law in the U.S.

This legislation sets more explicit rules for issuing stablecoins. It creates the first federal framework for dollar‑pegged stablecoin regulation in the United States.

The GENIUS Act mandates that U.S. dollar‑backed stablecoins hold 100% reserves in liquid assets.

This includes U.S. dollars, Treasury bills, or similar instruments, and reports reserve compositions monthly. The legislation covers the two largest stablecoins: USDT from Tether and Circle’s USDC.

Across Europe, the Markets in Crypto-Assets Regulation (MiCA) is a key regulatory framework for digital assets.

MiCA imposes reserve requirements, transparency, and licensing for crypto-asset service providers (CASPs).

The regulation became fully effective on December 30, 2024. MiCA aimed to prevent market abuse and ensure consumer protection across the EU.

Since MiCA implementation began, firms like AllUnity have secured licenses to drive stablecoin growth in the EU.

Recently, blockchain payment firm Ripple revealed plans to pursue a MiCA license to expand crypto services across the European Economic Area.

Summarily, all three stablecoin regulations or frameworks addresses the need for certainty in the crypto market. This is a key driver for confidence among issuers in the crypto space.

Benefit to Stablecoin Issuers

The updated licensing and AML guidelines from HKMA, GENIUS legislation, and MiCA hold benefits for stablecoin issuers.

Firstly, they provide clarity that helps issuers understand and meet regulatory expectations, reducing legal risks.

Specifically, the HKMA’s guidelines specify which activities require licensing, enabling issuers to plan operations confidently.

As stablecoin issuers operate legally in Hong Kong, they can tap into a large and diverse investor base, supporting business growth.

Additionally, measures set by regulators help to protect issuers against fraud risks, money laundering, and terrorist financing.

Also, the guidelines and legislation ensure adequate reserve assets for stablecoins. This enhances their stability and protects users from volatility or issuer insolvency.

MiCA provides significant benefits for issuers seeking broad EU market access. The GENIUS Act, on the other hand, focuses on dollar-backed stablecoins.

It aligns with Hong Kong’s fiat-referenced focus and potentially gives U.S. issuers an edge in international markets.