Hong Kong’s Stablecoins Ordinance came into effect in August 2025, and the first licences were issued in April 2026. As a result, Hong Kong’s stablecoin regulatory regime has moved beyond the policy-design stage and into actual licensing and supervision.
However, not every stablecoin-related business requires the same licence.
The applicable regulatory framework and licensing requirements differ depending on whether the business:
- directly issues stablecoins;
- distributes or sells them;
- integrates them into payment or wallet services; or
- provides technology or infrastructure only.
Korean fintech and digital asset companies should therefore determine their actual business role and potential regulatory status before establishing a Hong Kong entity.
Key Points
- A business that issues a fiat-referenced stablecoin (FRS) in Hong Kong, or issues a Hong Kong dollar-referenced FRS outside Hong Kong, may require an HKMA licence.
- A non-bank issuer generally needs a Hong Kong entity and at least HK$25 million in paid-up capital, or financial resources of an equivalent level approved by the HKMA.
- The HKMA also reviews reserve assets, redemption arrangements, distribution, marketing, AML/CFT, technology security, and long-term business viability.
1. Start by Distinguishing the Role of the Stablecoin Business
Hong Kong’s stablecoin licensing regime primarily focuses on the issuance of fiat-referenced stablecoins (FRS).
An FRS is a digital asset designed to maintain a stable value by reference to one or more official currencies.
Licensing may need to be considered in situations such as:
- issuing an FRS as a business in Hong Kong;
- issuing an FRS outside Hong Kong that references the Hong Kong dollar in whole or in part; or
- actively marketing to the Hong Kong public that the business carries on regulated FRS issuance.
Whether an FRS is “issued in Hong Kong” is not determined solely by the place of incorporation.
The Hong Kong Monetary Authority (HKMA) may review factors such as:
- where day-to-day management and operations take place;
- where the issuing entity is based;
- where minting and redemption activities are conducted;
- where reserve assets are managed; and
- where bank accounts related to issuance and redemption are maintained.
Accordingly, even where servers and headquarters are located in Korea, Hong Kong regulatory issues may still arise if the business:
- advertises to Hong Kong residents;
- operates a Hong Kong-facing promotional website; or
- runs a marketing strategy aimed at the Hong Kong market.
Key Issues by Business Role
Direct Issuer
Where the company determines minting and redemption of the FRS, the first issue is whether an HKMA stablecoin issuer licence is required.
Reserve Asset or Redemption Operator
Where a company holds reserve assets or performs redemption functions, it should review asset segregation, trust structures, and contractual allocation of liability.
Distributor
Where a company sells or intermediates issued FRS, it should determine whether it qualifies as a permitted provider.
Exchange, Wallet, or Payment Service Provider
Where the company provides custody, wallet, trading, or payment-linked services, separate licensing under the SFC or HKMA framework may also need to be considered.
Technology Provider
Even where a company provides only blockchain infrastructure or issuance technology, the agreement should clearly allocate:
- minting authority;
- operational control; and
- responsibility for system failures.
The regulatory status of two companies participating in the same project may differ depending on their contractual rights and actual functions.
2. A Hong Kong Entity, Capital, and Local Substance Are Required
If a foreign non-bank company applies for a Hong Kong stablecoin issuer licence, it will generally need to establish a Hong Kong-incorporated entity, with that entity acting as the licence applicant.
Different rules or exemptions may apply to foreign financial institutions that qualify as authorized institutions in Hong Kong.
A non-bank applicant must generally satisfy financial-resource requirements such as:
- at least HK$25 million in paid-up capital; or
- equivalent financial resources approved by the HKMA.
The applicant must also maintain sufficient liquid assets to continue performing its issuance and redemption obligations.
These requirements are not merely point-in-time conditions at the time of filing.
They must be maintained throughout the life of the licence and be available to support stable operations.
The fitness and propriety of management and key personnel is also subject to review.
The HKMA may assess:
- directors;
- chief executives;
- key managers; and
- controlling shareholders
based on factors such as:
- competence;
- reputation;
- regulatory history; and
- financial soundness.
The degree of substantive presence in Hong Kong is also important.
A structure in which a Hong Kong company exists only nominally while all major decisions and operations are carried out by the Korean parent may raise concerns in the licensing review.
Items to Review in Advance
- Hong Kong shareholding and governance structure
- Board and senior management composition
- Local senior personnel and scope of authority
- Business plan and financial projections
- Technology, operations, and funding arrangements with the Korean parent and affiliates
The fact that the HKMA granted only a small number of licences during the early licensing stage indicates that the review extends beyond minimum capital and considers governance, regulatory readiness, business substance, and operational capability together.
3. Reserve Assets and Redemption Arrangements Are Core Licensing Issues
A stablecoin issuer must maintain reserve assets at all times equal to or greater than the face value of the FRS in circulation.
Reserve assets should generally:
- be highly liquid;
- be of high quality;
- carry limited investment risk; and
- be managed separately from the issuer’s own assets and from reserves backing other stablecoins.
As a general principle, reserve assets should be denominated in the same currency as the reference currency of the relevant stablecoin.
Where there is a currency mismatch, prior approval from the HKMA may be required.
The legal structure should also ensure effective asset segregation so that, in the event of insolvency of the issuer or claims by other creditors, reserve assets remain available primarily for redemption by stablecoin holders.
The HKMA may require an independent legal opinion to verify the legal effectiveness of this structure.
The issuer should also regularly disclose:
- its reserve asset management policy;
- composition and market value of reserve assets;
- independent verification results; and
- audit findings.
Key Documents
- Reserve asset management policy and custody agreement
- Trust or asset-segregation agreement
- Legal opinion on the reserve structure
- Issuance and redemption terms
- Reserve verification and external audit framework
- Stablecoin white paper and disclosure materials
The fact that a company is technically capable of issuing a stablecoin does not necessarily mean that it is legally permitted to issue one.
Redemption
Redemption arrangements are also a core part of the licensing review.
Holders should generally be able to redeem their FRS at par value.
The issuer should not impose excessive fees or unreasonable redemption conditions.
Unless a different arrangement is approved, a valid redemption request should generally be processed promptly in accordance with the applicable regulatory requirements.
4. Distribution and Marketing Are Also Regulated
Even after obtaining an issuer licence, the stablecoin cannot necessarily be freely sold or distributed by any person in Hong Kong.
FRS may generally be provided through permitted offerors, which may include entities such as:
- licensed FRS issuers;
- Hong Kong Authorized Institutions;
- licensed Stored Value Facility (SVF) operators;
- SFC-licensed Virtual Asset Trading Platforms; and
- entities licensed for Type 1 Regulated Activity.
If a Korean company partners with a Hong Kong issuer to market a stablecoin or provide customers with an acquisition channel, it must distinguish between:
- ordinary advertising; and
- regulated offering or distribution activities.
Providing unlicensed FRS to the general public in Hong Kong or actively promoting unlicensed issuance may be restricted.
Companies should therefore review:
- promotional language on websites and apps;
- geographic targeting of advertising and promotions;
- partnership events aimed at Hong Kong customers;
- influencer and referral marketing structures; and
- the contractual role of each participant in the sale and distribution process.
Yield and Reward Structures Also Require Separate Review
There are additional restrictions on structures that provide economic returns to stablecoin holders.
A licensed issuer should not pay, or allow to be paid, interest or returns merely because a person holds the stablecoin, where those returns are linked to:
- the duration of holding;
- the face value held; or
- the market value held.
The following structures therefore require separate review:
- interest paid in proportion to stablecoin holdings;
- products offering returns for holding the token for a fixed period;
- distribution of reserve asset investment income to holders; and
- deposit, lending, or staking products linked to the stablecoin.
Not every point, discount, or payment reward is automatically prohibited.
The key question is whether the benefit functions in substance as an interest-like return arising from holding the stablecoin.
5. AML, Technology Security, and Business Continuity Are Reviewed Together
Stablecoin licensing is not limited to reviewing capital and reserve assets.
Applicants must establish an effective AML/CFT control framework to prevent money laundering and terrorist financing and remain subject to ongoing HKMA supervision after licensing.
Technology and Systems Review
Key areas may include:
- control over minting and redemption authority;
- wallet and private-key management;
- smart contract security;
- system outage and hacking response procedures;
- incident reporting and emergency response; and
- business continuity and orderly wind-down planning.
Outsourcing does not eliminate the issuer’s regulatory responsibility.
Even where functions such as:
- system development;
- reserve asset management; or
- customer verification
are outsourced, the issuer must maintain an internal control framework capable of continuously monitoring and supervising the outsourced service provider.
The innovation and sustainability of the business model are also relevant.
The HKMA may assess:
- whether the proposed use case can be implemented in practice;
- whether there is stable and credible demand; and
- whether the applicant has sufficient financial and human resources to operate the business over the long term.
What to Review Before Entering the Hong Kong Market
Korean fintech and digital asset companies considering entry into the Hong Kong stablecoin market should review the following in sequence:
- whether the company’s role is issuance, distribution, payment, custody, or technology provision;
- whether an HKMA or SFC licence is required;
- how the Hong Kong entity and governance structure should be designed;
- how reserve assets and redemption obligations will be legally segregated;
- whether sales, marketing, and reward structures comply with regulation; and
- whether AML/CFT and technology-security systems can be operated in practice.
If regulatory applicability is considered only after launching the business, the company may be required to redesign its corporate structure, contracts, systems, and marketing model.
It is therefore preferable to conduct legal and regulatory review from the initial business-model design stage.
DECENT Law Firm’s Hong Kong Market Entry Support
DECENT Law Firm’s Global Business Practice Team supports overseas fintech and digital asset businesses with matters including:
- classification of business roles and Hong Kong regulatory applicability;
- HKMA licensing strategy and Hong Kong entity/governance structuring;
- reserve asset, redemption, trust, and asset-segregation structuring and legal opinions;
- review of distribution and marketing agreements and terms of use; and
- development of AML/CFT internal controls and outsourcing governance frameworks.
This content is provided for general informational purposes only and does not constitute legal advice for any specific matter.