Hong Kong Stablecoin Law Turns Into China’s Crypto Sandbox

• Hong Kong’s Stablecoin Law lets Beijing test crypto regulation under HKMA supervision.
• China keeps its 2021 crypto ban while expanding e-CNY and studying yuan-backed tokens.
• U.S. GENIUS Act pushes Beijing to modernize digital-asset policy through Hong Kong.

Mainland China continues to enforce the 2021 crypto ban, established by the People’s Bank of China (PBOC) in its September 24, 2021, notice that made all virtual-currency transactions illegal.

That ban ended years of Chinese dominance in mining and exchange activity but also gave Beijing full control over what digital-asset innovation could legally occur.

Four years later, regulators still rely on that legal foundation, allowing experimentation only through regional carve-outs they can monitor.

Hong Kong Implements the Stablecoins Ordinance Under HKMA Licensing

Hong Kong took the opposite path and implemented a stablecoin issuer regime under the Stablecoins Ordinance, effective August 1 2025. HKMA began licensing fiat-referenced stablecoin (FRS) issuers, with guidance gazetted and an application window opened to market participants. Those steps created a supervised route for issuance, redemption, reserves, and AML controls.

Related: Hong Kong Showcases New Stablecoin Licensing Law at China-ASEAN Forum

By turning stablecoins into a regulated asset class, Hong Kong gave banks and fintech firms a compliant path to issue digital tokens backed by fiat reserves. That step effectively opened a door Beijing keeps closed on the Mainland, a door it can still watch closely.

Policy Sandbox for China’s Digital-Asset Experiment

That divergence turned Hong Kong into a policy sandbox for Beijing. Analysts pointed to the city’s role as a controlled venue to test licensed stablecoin issuance while the Mainland ban stayed in place. The arrangement let policymakers study compliance data, operational risks, and cross-border settlement frictions before deciding on any Mainland pivot.

e-CNY and the Push for Monetary Sovereignty

Meanwhile, the PBOC has kept its focus on the e-CNY, the country’s central-bank digital currency. In June 2025, officials announced plans to expand international use of the digital yuan to support a “multi-polar currency system.”

That goal directly ties to China’s desire to counter U.S. dollar dominance and reduce foreign-exchange dependence. For Beijing, the e-CNY remains the state-approved path for digital payments, and the main reason its crypto ban remains intact.

Bottom Line: Hong Kong Leads, Beijing Observes

Hong Kong’s Stablecoin law gives China a safe window into digital-asset regulation.

The HKMA licenses issuers; the PBOC studies the data; and the e-CNY remains Beijing’s main instrument for monetary sovereignty.

The GENIUS Act abroad and the PlusToken legacy at home frame the edges of that experiment. If the sandbox succeeds, Hong Kong’s model could become China’s blueprint for controlled crypto integration, a shift that lets Beijing observe every transaction without lifting its ban.

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