Original Article Title: "After the United States GENIUS, What's New in Hong Kong's Passed Stablecoin Bill?"

Original Article Author: Ethan, Odaily Planet Daily

On the evening of May 21, the Hong Kong Special Administrative Region Government's "Stablecoin Bill Draft" submitted to the Hong Kong Legislative Council by the end of 2024 passed the third reading, and after being signed by the Chief Executive and published as law, it can officially take effect. With this, Hong Kong has become the world's first jurisdiction to establish a comprehensive regulatory framework for fiat-pegged stablecoins, and compliant Hong Kong stablecoins are expected to officially launch by the end of this year.

At the same time, the U.S. Senate passed a procedural vote on May 19 by a vote of 66 to 32 on the "2025 United States Stablecoin Innovation and Establishment Act" (GENIUS Act), attempting to provide federal regulation for the U.S. dollar-pegged stablecoins (Recommended Reading: "GENIUS Act Expected to Pass Senate, Stablecoin Regulation Marks Historic Breakthrough"). This article's author will deconstruct the core content of the Hong Kong Stablecoin Bill "Ordinance" (Gazette Notice C 3116-C 3684), compare it with the U.S. Stablecoin Bill "GENIUS Act," and gather industry opinions to discuss the similarities and differences between the two regulatory frameworks and their impacts.

Deconstruction of Hong Kong Stablecoin Bill Content

"Stablecoin Bill Draft" Original Text

The "Stablecoin Bill Draft" consists of 11 parts, 175 sections, and 8 schedules, covering the issuance system, licensee responsibilities, regulatory powers, and sanctions. Below is a summary of some of the author's perceived key points based on the original text:

Definitions and Scope:

· Stablecoin Definition: Refers to a "fiat-pegged stablecoin," a token anchored to a legal tender (such as the Hong Kong dollar or the U.S. dollar) to maintain a stable value.

· Regulated Activities: Include issuing stablecoins, managing reserve assets, and providing stablecoin-related services.

Issuance System:

· Issuers must apply for a license from the Hong Kong Monetary Authority, with applicants limited to companies or recognized entities outside Hong Kong.

· Minimum registered capital of HK$25 million to ensure financial strength.

· Unauthorized engagement in regulated activities or false advertising is a crime punishable by fines and imprisonment.

Licensee Responsibilities:

· Reserve Management: Stablecoins must be pegged 1:1 to a fiat currency, with reserves fully backed by assets and subject to regular audits.

· Consumer Protection: Mandatory unconditional redemption rights to ensure users can redeem at face value at any time.

· Governance Requirements: License holders must appoint a CEO, directors, and stablecoin manager, subject to approval by the Hong Kong Monetary Authority.

· Regulation and Enforcement: The Hong Kong Monetary Authority may require license holders to provide information, conduct investigations, or appoint a statutory manager. Sanctions include fines, license revocation, and criminal liability. Engaging in unlicensed activities, selling by unauthorized providers, or convictions through prosecution can result in a fine of up to HK$5 million and 7 years of imprisonment; fraudulent activities can lead to a fine of up to HK$10 million and 10 years of imprisonment.

· Transitional Arrangements: Existing stablecoin issuers must apply for a license or exit the market before the effective date (expected to be enforced by 2025).

Comparison with the U.S. GENIUS Act

Overview of the GENIUS Act

The GENIUS Act (S. 394) aims to provide a federal regulatory framework for the U.S. dollar-pegged payment stablecoins to promote innovation and maintain the global status of the U.S. dollar (as evident from Section 1 of the bill). The bill was introduced on February 4, 2025, and passed a procedural vote on May 19, but has not been finally enacted.

Comparative Analysis

Summary of Key Differences and Strategic Positioning (Points of Divergence):

Regulatory Framework and Market Positioning

· Hong Kong: Adopts a centralized regulatory model led by the Financial Commissioner, supporting stablecoin issuance pegged to the Hong Kong dollar, U.S. dollar, and other major currencies. The approach balances financial stability and innovation on a "risk-based" principle, aiming to create an international and diverse stablecoin ecosystem to enhance Hong Kong's compatibility as an international financial center.

· U.S.: Implements a tiered regulation (federal and state cooperation), focusing on the dominance of the U.S. dollar-pegged stablecoins. Issuers with a market cap exceeding $100 billion are required to comply with federal regulation, with the core objective of "protecting the U.S. dollar's dominance + preventing systemic risks," restricting the compliance of non-USD stablecoins, highlighting geopolitical strategic considerations.

Stringency of Regulation and Market Impact

· Hong Kong: Sets strict requirements such as a minimum capital of HK$25 million, 100% high-liquidity reserve assets, 72-hour mandatory redemption, etc. While enhancing market stability, these requirements may increase compliance costs for small and medium-sized institutions, potentially suppressing innovation in the short term but beneficial in the long run to build investor trust.

· United States: Reserve assets allow for a combination of short-term government bonds, repurchase agreements, etc., providing high investment flexibility, but with strict restrictions on non-US dollar stablecoins; tiered regulation offers small issuers a state-level regulatory option, but may lead to inconsistent regulatory standards and higher enforcement complexity.

Consumer Protection and International Coordination

· Hong Kong: Mandatory licensed entities must sell to retail investors, regulate advertising, and guide the market towards compliance through a temporary licensing regime (6 months), resulting in more direct consumer protection measures.

· United States: Focuses on monthly disclosure of reserve assets and anti-money laundering requirements, but consumer redemption rights protection and information disclosure frequency (regular auditing in Hong Kong, monthly public disclosure in the US) are relatively weakened, and it relies on federal and state-level regulatory coordination, with international mutual recognition mechanisms still being explored (such as establishing reciprocal arrangements with foreign jurisdictions).

Core Consensus and Industry Impact (Commonalities):

· Regulatory Consensus: Both require stablecoins to have 100% reserve asset coverage for circulation, prohibit misappropriation or high-risk investments, embodying the international principle of "same activities, same risks, same regulation."

· Industry Impact: The Hong Kong bill is more likely to drive offshore Renminbi stablecoin pilots, becoming a "digital bridge" for Renminbi cross-border payments; the US bill, on the other hand, solidifies the US dollar's dominant position in the stablecoin field. Starting from "diversity and inclusion" and "dollar-centric," respectively, the two shape different paradigms for global stablecoin regulation.

Overall, the Hong Kong bill aims to attract global capital and diverse stablecoin projects through "compliance-based foundation + open innovation," while the US bill seeks to maintain domestic financial hegemony through "dollar dominance + risk control." The inherent differences between the two reflect the different economic entities' considerations in financial stability, currency strategy, and innovation inclusiveness.

Various Perspectives

Hong Kong Community Member GFF.eth (@GF41536085):

On May 19, the US Senate procedurally passed the US Stablecoin Act "GENIUS Act," followed by Hong Kong passing the Stablecoin Act on May 21, whether it's just a show or not, at least all prerequisites for the internationalization of the Renminbi have been met. Stablecoins are financial weapons, and now all pre-launch insurances have been unlocked, fingerprints, passwords, irises, all unsealed. Next, it depends on whether the decision-makers dare to press the button. Will they dare to issue the Renminbi on Ethereum? If they end up issuing a Hong Kong dollar stablecoin, then that would be a joke. The Hong Kong dollar operates on a linked exchange rate system. If it becomes a US dollar stablecoin, and then makes it a stablecoin, that would be a waste of time.

Gary Tiu: Executive Director and Head of Regulatory Affairs at OSL Group

The OSL Group has been actively involved in Hong Kong's stablecoin policy discussions, witnessing and driving the formation of the stablecoin framework. The Hong Kong Stablecoin Act has set a unified standard for the industry's development, helping to enhance transparency and long-term stability.

Johnny Wu (@Johnny_nkc): CPPCC Member, Hong Kong Legislator, Leader of the Hong Kong Web3 Cryptocurrency Leadership Group

Hong Kong is promoting encrypted stablecoins to make Hong Kong an international Web3 financial center, leveraging the population of 1.4 billion in mainland China and its dividends. It will not only launch an HKD stablecoin but also introduce an offshore RMB stablecoin and other stablecoins, embracing cryptocurrencies, Web3, and stablecoins. The passage of the bill today is just the first step in the Web3 infrastructure. I hope to work with everyone to promote: first, create application scenarios - stablecoin issuance is the first step, and the most important thing is to create more stablecoin application scenarios. Whether in physical retail, cross-border trade, trading pairs, etc., I see great potential and opportunities to promote the implementation of stablecoins. I call on friends from various industries in the traditional and physical scenes to understand and embrace stablecoins. This will be an important financial innovation; second, improve the stable market attributes, including releasing stablecoin interest to holders. Releasing interest helps enhance the market competitiveness of stablecoins and provides incentives for more people to participate, expanding the overall stablecoin market share and driving stablecoin development.

The Wall Street Journal:

On May 21, the Hong Kong Legislative Council passed the third reading of the "Stablecoin Bill," marking the formal inclusion of stablecoins as a virtual asset in the legal regulatory system. At the same time, the U.S. government is accelerating stablecoin legislation. With major financial centers all establishing their digital currency systems, ensuring greater monetary control in the digital financial era, this "digital coinage power struggle" may have just begun.

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