Hong Kong will begin enforcing its stablecoin law on August 1, 2025, with strict penalties for unlicensed providers.
- Unlicensed stablecoin promotions to retail users will be illegal.
- Violators could face fines up to HK$50,000 and six months in prison.
- Only a few companies are expected to receive licenses initially.
What the Law Says
The new law in Hong Kong targets fiat-referenced stablecoins. These coins are backed by traditional currencies, like the US dollar. The law will make it a criminal offense to offer or promote these stablecoins to the public without official approval. This includes online ads and direct offering to retail investors.
Penalties for Rule Breakers
If someone breaks this law, they could pay up to HK$50,000, which is around $6,300. They could also spend up to six months in jail. The Hong Kong Monetary Authority (HKMA) warned people to avoid any unlicensed stablecoin investments.
Why the Law Exists
HKMA Chief Executive Eddie Yue said the move will protect investors. He explained that many stablecoin projects are not ready for use and could be risky. The market has seen a lot of hype, which led to stock price jumps and high trading volumes without strong reasons. Yue said this law helps control the “euphoria” and sets limits on unsafe promotions.
Only a Few Licenses Expected
About 50 companies have applied for a license to offer stablecoins in Hong Kong. But most of these applications are not complete or realistic. Yue said many don’t have solid plans or the skills to manage risk. Because of this, only a few licenses will be approved at first.
Other Regions Are Also Taking Action
Other places, like the European Union, have their own crypto rules. Their MiCA law also bans unlicensed promotions and includes big financial penalties. But unlike Hong Kong, MiCA laws do not send people to jail. In the United Kingdom, rules exist, but only half of the flagged illegal ads have been removed.
Hong Kong’s new approach stands out for including jail time. The city aims to find balance between crypto innovation and strong investor protection.
Source: cointelegraph.com
