Hong Kong will require stablecoin issuers operating in the city or promoting Hong Kong dollar-pegged tokens to obtain licences under a proposed regulatory framework. The rules, announced by the Financial Services and Treasury Bureau, focus on reserve management, investor protection, and compliance, ensuring issuers maintain high-quality liquid assets fully backing their tokens. The Hong Kong Monetary Authority (HKMA) launched a stablecoin sandbox in March to engage industry players, with multiple firms testing business models. Officials stress the need to balance financial innovation with risk management, positioning Hong Kong as a bridge between traditional finance and virtual assets. Lawmakers see stablecoin regulation as critical for the city’s Web3 ambitions, with a dedicated virtual asset custody law expected to be finalised next year.