Legislation on stablecoins a milestone for Hong Kong

Hong Kong's introduction of the world's first dedicated legislation on fiat-referenced stablecoins — a type of cryptocurrency — marks a significant milestone in the city's push to solidify its status as a global financial hub that pioneers in virtual asset regulation, financial experts said.

The move also reflects China's broader strategic ambition to strengthen its financial heft in the digital age, the experts said. They added that the legislation may open up new possibilities for cross-border use of the digital yuan, or e-CNY, while providing a reference for any potential adoption of stablecoins in other parts of the country.

A stablecoin is a digital currency that is built on blockchain technology and pegged to fiat currencies or other assets at a designated exchange rate to maintain a stable value. Fiat-referenced stablecoins are backed by fiat currencies, which are government-issued money not backed by a physical asset such as gold.