Stablecoins are quickly becoming one of the most used digital assets around the globe, thanks to their peg to traditional currencies. This exponential growth is leading regulators to develop frameworks for their regulation. Hong Kong took a big step forward with the passage of its Stablecoins Bill on May 21, 2025. This new Street Act ordinance would go into effect on August 1, 2025. This move signals a historic departure from the usual “pound-foolish” approach to regulation by large economies. The U.S., UK, and EU are all moving in the direction of single fiat-backed stablecoins.

Hong Kong's Stablecoin Ordinance

Hong Kong’s regulatory regime is narrowly focused on fiat-backed stablecoins pegged to the Hong Kong dollar (HKD). The legislation has been amended to cover HKD-linked stablecoins issued from overseas. This new law is indicative of a comprehensive and forward-looking regulatory philosophy.

Issuers of fiat-backed stablecoins are required to obtain authorization and are subject to continuous regulatory oversight. These issuers are mandated to maintain full 1:1 reserve backing with liquid assets, ensuring that each stablecoin is fully backed by a corresponding unit of the referenced fiat currency.

Such sufficiency is most vital for the Hong Kong regime’s stated focus of keeping assets backing stablecoins safe. They take great pains to protect these assets from takeover, chaos and corruption. Guaranteeing stablecoin holders the right to redeem their holdings at par value gives users confidence and stability. Additionally, the approval of interest for stablecoin holders is expressly prohibited under the Hong Kong framework.

Global Regulatory Landscape

Despite the recent comprehensiveness of Hong Kong’s approach, other major economies have been undertaking efforts to create their own regulatory frameworks for stablecoins. The UK’s proposed regime, by comparison, only applies to fiat-backed stablecoin issuers incorporated in the UK. As implementation of the GENIUS Bill progresses, the US is watching closely. This draft legislation creates a two-tier authorization system for fiat-backed stablecoin issuers that would provide federal and state oversight.

The US GENIUS Bill is notable for its innovative regulatory framework. It allows for authorization at the federal and state levels, rendering it the most pluralistic of all options. While imperfect, this approach recognizes the reality of the regulatory landscape for cannabinoid products in the US. States have long played an outsized role in financial regulation.

The US, UK, EU, and Hong Kong are working towards agreement on foundational principles for single fiat-backed stablecoins. Despite their unique approaches, they are working to align their regulations. These shared principles include the need for authorization and supervision of issuers, the maintenance of 1:1 reserve backing, and the safeguarding of backing assets.

Comparing Regulatory Approaches

A detailed comparison of fiat-backed stablecoin regulation in the UK, EU, US, and Hong Kong reveals both commonalities and differences. All four jurisdictions are in agreement on the need for stablecoin regulation to prevent systemic risks and consumer harms. The differences in approaches run very deep. Their scope, regulatory structure, and depth of regulatory authority are all quite different.

For example, the EU's Markets in Crypto-Assets (MiCA) regulation provides a comprehensive framework for crypto-assets, including stablecoins, while the UK's proposed regime is more narrowly focused on fiat-backed stablecoins. In the same spirit, the US GENIUS Bill would create a two-level authorization system, while Hong Kong’s ordinance sets up a centralized regulatory regime.

While these differences are notable, on the whole, the trend is clearly in the direction of increased regulatory clarity and harmonization across the stablecoin space. Stablecoins are some of the fastest-growing forms of adoption. In turn, regulators around the world are establishing frameworks that promote innovation—not inhibit it—while protecting our financial systems and consumers.