Hong Kong and South Korea cooperate to promote stablecoin regulation

Stablecoins serve as an important bridge connecting TradFi and Blockchain technology, attracting widespread attention from global regulatory bodies. Hong Kong, as an Asian financial hub, is accelerating the development of a stablecoin regulatory framework by strengthening regulatory cooperation with South Korea, aiming to solidify its position as an Asian digital asset center and promote the deepening of cross-border financial cooperation. Recently, the Financial Secretary of Hong Kong, Paul Chan, visited Seoul and engaged in in-depth discussions with leaders of the South Korean financial sector, including Kim Byung-hwan and Lee Chang-yong, focusing on the formulation of stablecoin regulatory rules and the potential for cross-border financial cooperation. This collaboration not only reflects the emphasis of the Asian financial market on digital asset regulation but also provides a new model for the standardized development of the global stablecoin market.

Regulatory cooperation on stablecoins between Hong Kong and South Korea

During his visit to Seoul, Chan Mo-po met with financial leaders including Kim Byung-hwan, Chairman of the Financial Services Commission (FSC), and Lee Chang-yong, Governor of the Bank of Korea (the central bank of Korea), to discuss the latest developments in Hong Kong's digital asset space, particularly the upcoming implementation of the Stablecoins Ordinance on August 1, 2025. This ordinance establishes a comprehensive regulatory framework for issuers of fiat-referenced stablecoins (Fiat-Referenced Stablecoins, FRS), requiring them to apply for a license from the Hong Kong Monetary Authority (HKMA), maintain a 1:1 reserve asset, conduct regular audits, and ensure operational transparency. Chan Mo-po emphasized that Hong Kong's regulatory framework follows the principle of 'same activity, same risk, same regulation,' aiming to balance innovation and financial stability while aligning with international standards.

The South Korean financial sector has shown a keen interest in Hong Kong's stablecoin regulatory policies. Shin Hyun-dong, the chair of the preparation committee in South Korea, stated at a related meeting that if stablecoins based on the won, Hong Kong dollar, and offshore renminbi (CNH) can be successfully launched, they will significantly enhance the efficiency of capital flow in scenarios such as cross-border clearing, international remittances, and foreign exchange management, addressing the cumbersome processes, high costs, and time delays associated with traditional currency exchanges. Furthermore, Park Chung-hyun, the vice chair, proposed the establishment of an "Asian Digital Asset Cooperation Mechanism" centered around Hong Kong and South Korea, collaborating with other regions in Asia to promote multilateral cooperation through the regular hosting of the "Asian Stablecoin Development Vision Forum." This proposal highlights the shared vision of both countries in the field of stablecoin regulation, which is to enhance cross-border digital asset channels through coordinated policies and facilitate regional financial integration.

Hong Kong's regulatory framework and global positioning

The Stablecoin Ordinance in Hong Kong was passed by the Legislative Council on May 21, 2025, and will officially take effect on August 1, marking the establishment of Asia's first complete regulatory framework for stablecoins. The ordinance requires stablecoin issuers to meet stringent conditions, including a minimum paid-up capital of HKD 25 million, sufficient liquid assets, comprehensive reserve management, and risk disclosure obligations. Additionally, the Hong Kong Monetary Authority (HKMA) issued the "Consultation Draft Guidelines for Regulating Stablecoin Issuers" and the "Consultation Paper on Anti-Money Laundering and Counter-Terrorist Financing Requirements" on May 26, 2025, further clarifying specific requirements for technology risk management, operational risk management, and reputation risk management. HKMA Chief Executive Eddie Yue stated that Hong Kong is one of the first jurisdictions globally to establish a regulatory framework for stablecoin issuers, and this move will enhance Hong Kong's competitiveness as an international financial center while providing experience sharing for global stablecoin regulation.

Hong Kong's regulatory framework not only focuses on fiat-backed stablecoins but also leaves room for future expansion to asset-backed stablecoins (such as tokens linked to gold or real estate). The Hong Kong Monetary Authority's "FinTech 2025 Strategy" emphasizes the interoperability of Blockchain technology in cross-border settlements, providing a testing ground for innovative applications of stablecoins. For example, Hong Kong-listed company Jin Yong Investment is collaborating with fintech company AnchorX to issue a stablecoin "AxCNH" pegged 1:1 to offshore RMB, demonstrating Hong Kong's active exploration in the stablecoin sector.

The role of South Korea in stablecoin regulation

As another important financial market in Asia, South Korea has been accelerating its regulatory pace for digital assets in recent years. The Financial Services Commission and the Bank of Korea are closely monitoring the potential impact of stablecoins, particularly their role in cross-border payments and financial innovation. Bank of Korea Governor Lee Chang-yong expressed interest in regulatory cooperation on stablecoins during talks with Paul Chan, believing that this would help enhance South Korea's position in the global digital finance landscape. Financial professionals in South Korea also pointed out that the anonymity and cross-border usage characteristics of stablecoins may pose challenges for anti-money laundering (AML) and counter-terrorism financing (CFT), thus requiring strengthened regulatory coordination through international cooperation.

It is worth noting that the collaboration between South Korea and Hong Kong is not limited to the establishment of regulatory frameworks but also includes the exploration of practical application scenarios. For example, stablecoins based on the Korean Won and Hong Kong Dollar are considered to play an important role in the Asian financial market, especially in simplifying cross-border payments and reducing transaction costs. In addition, the Governor of the People's Bank of China, Pan Gongsheng, recently stated at a forum in Shanghai that the importance of stablecoins in global commerce is increasing, and Hong Kong's regulatory practices provide a testing ground for Chinese companies to experiment with stablecoin applications. This further highlights the strategic significance of the collaboration between Hong Kong and South Korea in the Asian digital asset ecosystem.

The regulatory cooperation on stablecoins between Hong Kong and South Korea comes at a time when the global digital asset market is experiencing rapid growth. According to data from CoinMarketCap, as of July 14, 2025, the price of Bitcoin (BTC) is $118,978.95, up 40.06% over the past 90 days, reflecting strong momentum in the crypto market. The total market capitalization of global stablecoins has exceeded $200 billion and is expected to reach $2.8 trillion by 2028. This growth trend is prompting countries to expedite the formulation of stablecoin regulatory policies to address potential financial stability risks and illegal activities.

In contrast to Hong Kong's strict regulations, the United States under the Trump administration has adopted a more lenient policy towards stablecoins. The GENIUS Act provides a legal foundation for regulated stablecoins, supporting the rapid development of dollar-backed stablecoins (such as USD1, with a market capitalization of $2.2 billion). However, cooperation between Hong Kong and South Korea places greater emphasis on compatibility with the existing financial system, highlighting the reduction of systemic risks through tokenized deposits and fiat-pegged stablecoins. This difference may reshape the regulatory landscape of the global stablecoin market, with coordinated policies in Asia expected to serve as a reference for other regions.

The regulatory cooperation between Hong Kong and South Korea is not only a convergence of the financial strategies of both countries but also reflects Asia's rise in the global digital asset competition. Hong Kong's Financial Secretary Paul Chan stated: "In the context of profound changes in the global political and economic environment, Hong Kong is seen as a safe haven for global capital, and we have clear and predictable policies, and are developing a robust framework for the regulation of digital assets and stablecoins." This statement highlights Hong Kong's determination to attract global capital through regulatory innovation. The Coincu research team believes that cooperation among Asia's financial giants will enhance regional financial connections and lay the foundation for the long-term growth of the stablecoin market.

In addition, Hong Kong's "stablecoin regulations" are expected to attract over 40 global companies competing for limited licenses, further consolidating Hong Kong's position as a global stablecoin hub. Through cooperation with Hong Kong, South Korea can not only learn from its regulatory experience but also play a greater role in the Asian digital asset cooperation mechanism. In the future, both parties may further promote cross-border regulatory coordination and the collaborative development of financial technology through regular forums and information-sharing mechanisms.

The regulatory cooperation on stablecoins between Hong Kong and South Korea marks an important step for Asia in the global digital asset arena. By establishing a clear regulatory framework and enhancing cross-border cooperation, the two countries aim to balance financial innovation with risk management, providing assurance for the healthy development of stablecoins. Hong Kong's Stablecoin Regulation not only sets a regulatory benchmark for Asia but also provides valuable experience for the normalization of the global stablecoin market. With the continuous rise in prices of digital assets like Bitcoin and the rapid expansion of the stablecoin market, the cooperation between Hong Kong and South Korea will further strengthen Asia's leadership position in global digital finance, injecting new momentum into cross-border financial innovation and regional economic integration.