Commentary: Hong Kong’s Stablecoin Bill: A Signal for Asia’s RWA Future?

Background:

At DigiFT, I wrote this article as part of a commentary series, "Market Decoded", to position the firm as a thought leader and source for reliable analysis on major market movements.

Format: 

Blog article | Published 23 May 2025 here

On May 21, 2025, the Hong Kong Legislative Council passed the Stablecoins Bill, creating a formal licensing regime for fiat-referenced stablecoin (FRS) issuers. While local in implementation, this regulatory milestone places Hong Kong squarely in a broader Asian push to shape the future of compliant decentralized finance (DeFi) and tokenized financial infrastructure.

Coming just one day after the U.S. Senate passed the GENIUS Act, Hong Kong’s move adds weight to a global convergence around stablecoin regulation—shifting the conversation towards building trusted digital asset ecosystems with real-world impact.

What the Bill Covers

The new framework requires any issuer promoting fiat-backed stablecoins to the Hong Kong public to be licensed by the Hong Kong Monetary Authority (HKMA). Requirements include:

• Full Reserve Backing: Held in cash or high-quality, highly liquid assets such as short-term government securities

• Redemption Rights: Stablecoins must be redeemable at par value at any time.

• Transparency: Issuers must regularly disclose reserve holdings and undergo audits

• Operational Standards: AML/CTF compliance and risk controls are mandatory

This regulatory clarity is paired with active development. Hong Kong’s Stablecoin Sandbox—launched in 2024—has allowed firms like Standard Chartered, Animoca Brands, and JD Coinlink to test real-world use cases across payments, capital markets, and trade finance. It reflects a coordinated effort to turn policy into practical rails for tokenized activity.

Asia Is Building A Competitive Regulatory Edge

Hong Kong’s bill is not an isolated event—it’s part of a regional surge in digital asset regulation.

In Singapore, the Monetary Authority of Singapore (MAS) recognized XSGD—the first Singapore dollar-backed stablecoin—as a regulated digital payment token in late 2024. By May 2025, XSGD expanded its reach with a launch on the XRP Ledger, signaling Asia’s growing influence in setting global standards for trusted stablecoins.

In Japan, the Financial Services Agency (FSA) introduced proposed reforms in March 2025 to ease issuance and distribution rules for stablecoins, aiming to encourage broader adoption and open new channels for regulated intermediaries.

Meanwhile in Taiwan, the Financial Supervisory Commission is conducting sandbox trials to shape a formal digital asset framework—focusing on custody, consumer protection, and institutional-grade infrastructure.

Taken together, this regional momentum makes one thing clear: Asia isn’t just keeping up—it’s shaping the global DeFi narrative around compliance, cross-border access, and real-world utility.

Why It Matters for RWAs

Stablecoins underpin on-chain finance. They’re not just payment tools—they are the operational foundation for issuing, settling, and compositing real-world assets (RWAs) on-chain. The Hong Kong bill mirrors many elements of the U.S. GENIUS Act: transparent reserves, redemptions at par, and regulated issuers—building alignment around what “compliant” digital money should look like, both locally and globally.

This regulatory clarity reinforces the growing credibility of tokenized RWAs. In an era where on-chain capital is chasing stability as much as returns, institutional-grade RWAs offer a rare combination of yield, transparency, and trust. These are no longer fringe products—they’re becoming core components of regulated, composable financial on-chain ecosystems.

At DigiFT, we believe the future of compliant DeFi is one where RWAs and stablecoins complement each other—with RWAs providing yield and stablecoins anchoring sustainable liquidity.

What Comes Next

Hong Kong’s stablecoin legislation is more than a domestic policy update—it’s part of a global stepping stone towards a regulated, interoperable future for RWAs and DeFi. Regulatory developments in the region are becoming a proving ground for what cross-border digital asset finance can look like when public and private sectors align.

As the first tokenized RWA exchange licensed by MAS and Approved-in-Principle by Hong Kong’s Securities & Futures Commission, we’re proud to be at the nexus of this regulatory evolution. By enabling real-world-backed products like UBS uMINT (tokenized money market fund) and Invesco iSNR (tokenized senior loan private credit strategy) to integrate into the on-chain ecosystem, DigiFT is helping unlock institutional-grade yield—securely, transparently, and compliantly.

The shift is happening. Asia is building the rails. And RWAs may be the cargo that drives the next decade of Web3 finance.