Reference — HKMA Stablecoin Regulation
This document summarizes the Hong Kong Monetary Authority (HKMA) regulatory framework for fiat-referenced stablecoin issuers as it applies to Hkchain's design and MVP scope. It is a working reference, not a legal interpretation. Primary sources are linked at the bottom.
Framework at a glance
- Ordinance: Stablecoins Ordinance (Cap. 656), effective 2025-08-01.
- Regulator: Hong Kong Monetary Authority (HKMA).
- Licensing: First licences granted March 2026. Further licensing decisions continuing after that.
- Guidelines:
- Guideline on Supervision of Licensed Stablecoin Issuers (HKMA)
- Guideline on Anti-Money Laundering and Counter-Financing of Terrorism for Licensed Stablecoin Issuers (HKMA)
Requirements we track (and where Hkchain addresses them)
Licensing and entity requirements
| Requirement | Hkchain position |
|---|
| HK-incorporated company | Off-chain; issuer's corporate governance, not Hkchain |
| Minimum paid-up capital HK$25M + liquid capital HK$3M | Off-chain |
| Fit-and-proper test for controllers, directors, CEO, stablecoin managers | Off-chain; Hkchain L5 whitelist references HKMA license number |
Hkchain does not substitute for entity-level licensing. Hkchain admits only L5-whitelisted entities as issuers, where whitelisting presumes HKMA licensure.
Reserve management
| Requirement | Hkchain mechanism |
|---|
| 100% backing of circulation at all times | Mint gated on fresh ATTESTED reserve in x/reserve; freshness parameter is governance-managed |
| Overcollateralization expected for buffer | Buffer recorded in each attestation (circulation vs reserve MV); visible in public lookup |
| High-quality, highly liquid assets only | Off-chain composition control; Hkchain records market value aggregate per attestation |
| Reserve assets fully segregated, held under effective trust | Off-chain legal arrangement; Hkchain's attestation ties the on-chain state to the off-chain trust structure |
Reserve reporting and disclosure
| Requirement | Hkchain mechanism |
|---|
| Daily statements of par value and reserve market value | x/reserve.DailyStatement auto-generates at day boundary; queryable by date |
| Weekly public disclosure | QueryDailyStatement + QueryLatestAttestation are public REST endpoints; issuer website links to the queries |
| Independent auditor attestation at HKMA-acceptable frequency | MsgSubmitAttestation + MsgCoSignAttestation; governance-parameterized frequency |
| Attestation covers period-end AND randomly selected business day | AttestationMsg schema includes random_day field as a first-class attribute |
| Public disclosure of attestation at prominent location on issuer's website | PDF on issuer site; SHA-256 hash on chain; Public Reserve Lookup page verifies the binding |
AML/CFT — Customer Due Diligence (CDD)
| Requirement | Hkchain mechanism |
|---|
| Real-name verification (no anonymous/pseudonymous accounts) | x/kyc — only L2 and above can hold/transfer HKD on mainnet; L1 is testnet-only |
| CDD collection (ID, address, purpose, nature of relationship) | Off-chain by KYC provider; x/kyc stores level + evidence hash |
| Enhanced due diligence (EDD) for PEPs, high-risk jurisdictions, high-risk clients | Off-chain by KYC provider; x/kyc levels encode EDD outcome (L3 for EDD-completed retail) |
| Ongoing monitoring (not just onboarding) | AnteHandler decorators + reviewer workflow |
| Travel Rule — zero threshold | TravelRuleDecorator requires IVMS101 payload on every transfer |
| Travel Rule — broader fields for transfers ≥ HKD 8,000 | TravelRuleDecorator tiered enforcement |
AML/CFT — Transaction monitoring
| Requirement | Hkchain mechanism |
|---|
| Automated screening (sanctions, thresholds, patterns) | AnteHandler decorators |
| Flagged-transaction review by qualified staff | Reviewer sub-role queue in Compliance Console |
| Decision audit trail | MsgReviewFlag / MsgCloseFlag record on-chain with evidence hash |
| Suspicious Activity Reports (SAR) filed with JFIU/HKMA | Off-chain filing; Hkchain emits SARFiledEvent with opaque reference for audit trail |
Governance and fit-and-proper for key personnel
| Requirement | Hkchain position |
|---|
| Fit-and-proper for controllers, directors, etc. | Off-chain; Hkchain whitelisting references the fit-and-proper determination |
| Ongoing notification to HKMA of material changes | Off-chain; Hkchain provides data surface to support such reporting |
Supervisory access
| Requirement | Hkchain mechanism |
|---|
| Periodic report submission (daily, weekly, monthly, annual) | QueryReport generates structured reports aligned with HKMA format; Dashboard schedules exports |
| HKMA inspection rights | Supervisor dashboard provides full observational surface; QueryAuditLog supports targeted investigation |
| Emergency intervention (license suspension, directed remediation) | Off-chain action; Hkchain supports via governance proposals for chain-level remediation |
Redemption
| Requirement | Hkchain mechanism |
|---|
| Redemption at par value without unreasonable fees | MsgBurn opens redemption request; MsgAckRedemption closes it; fee semantics per issuer |
| Timely redemption execution | Off-chain payment rail; Hkchain records the commitment and acknowledgement as events |
Points of particular emphasis
Zero-threshold Travel Rule
Hong Kong is stricter than some peer jurisdictions — there is no monetary threshold below which Travel Rule obligations are waived. Every transfer of HKD must carry originator and beneficiary information. Hkchain enforces this at the AnteHandler level. A non-compliant transfer does not execute.
Public disclosure, not just reporting
HKMA expects reserve attestations to be published at a prominent location on the issuer's website. Hkchain's public reserve lookup goes beyond this expectation by providing a chain-native, cryptographically bound verification path accessible to anyone.
No anonymous holdings
This is explicit in the AML/CFT Guideline. Hkchain enforces it at the chain level by treating L1 (unverified) as non-holding on mainnet. The absence of anonymous accounts is a first-order design constraint.
Random-day attestation
HKMA requires attestations to cover not only period-end but at least one randomly selected business day within the period. This constraint directly shapes x/reserve.Attestation schema (the random_day field is first-class) rather than being an off-chain convention.
What this reference is not
- Not a legal interpretation. Consult qualified Hong Kong counsel for licensing or compliance determinations.
- Not a substitute for the Guidelines themselves. Always check the latest HKMA publications for authoritative text.
- Not a complete inventory. Hkchain tracks the requirements materially affecting chain design. Requirements primarily off-chain (e.g., corporate governance, capital ratios) are summarized here only for context.
Primary sources
Related FATF / international references
Review and update policy
This reference is updated as the Guidelines evolve or as Hkchain's coverage of requirements changes. Last review: 2026-04-19.