While this Note summarises a number of principal provisions of the SO, the Guideline on Supervision of Licensed Stablecoin Issuers (“Supervisory Guideline”) and the Guideline on Anti-Money Laundering and CounterFinancing of Terrorism (For Licensed Stablecoin Issuers) (“AML/CFT Guideline”), this Note is not intended to be a comprehensive guide to the wide variety of compliance issues that may be relevant to a licensee. It is therefore not a substitute for appropriate legal and other professional advice in a given case. Prior to applying for a licence under the SO, parties are therefore advised to familiarise themselves not only with this Note but also with the SO, the Supervisory Guideline and the AML/CFT Guideline and seek legal and professional advice as appropriate.
1. Purpose & Scope
- Issued under the Stablecoins Ordinance (Cap. 656).
- The Monetary Authority (MA) is the licensing authority for stablecoin issuers in Hong Kong.
- Applies to anyone issuing or marketing fiat-referenced stablecoins in or into Hong Kong.
2. Licensing Requirement
- A licence is required to issue or market specified stablecoins unless exempted by the MA.
- Unlicensed activity is an offence.
3. Minimum Criteria for Licence
- Corporate structure: Applicant must be a Hong Kong-incorporated company (or subsidiary) unless already an authorized institution.
- Capital requirement: Minimum HKD 25 million paid-up capital.
- Reserve assets: Fully backed, segregated, high-quality, and held with qualified custodians; subject to audit and disclosure.
- Redemption: Holders must have the right to redeem at par within 1 business day.
- Governance: Senior management must be fit and proper, with relevant expertise, and largely based in Hong Kong.
- Risk management: Policies for credit, liquidity, technology, operational, and reputational risks.
- AML/CFT compliance: Full compliance with AMLO and MA guidelines.
- Disclosure: White paper, reserve attestation, redemption rules, risk disclosures.
- Other restrictions: No interest payments on stablecoins; must maintain orderly exit/recovery plans.
4. Application Process
- Pre-application consultation with MA is encouraged.
- Submission requires detailed documentation (corporate info, governance, compliance systems).
- Independent assessment reports may be required.
- Applications reviewed by the Stablecoin Advisory Committee.
5. Ongoing Obligations
- Annual licence fees, proper use of licence number in materials.
- Continuous compliance with minimum criteria.
- Mandatory reporting of insolvency, operational difficulties, or material changes.
6. Supervisory Powers & Enforcement
- MA may require information, appoint advisors, or install a statutory manager.
- Grounds for revocation/suspension include: failure to meet criteria, insolvency, misleading information, violation of licence conditions, failure to redeem, or risk to financial stability.
- Licences can also be revoked voluntarily, or suspended temporarily (up to 6 months).