Hong Kong’s New Stablecoin Bills vs. America’s GENIUS Act

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In the space of forty-eight hours regulators on opposite sides of the Pacific sketched the legal scaffolding that could determine how fiat-backed stablecoins operate for the next decade. On 21 May 2025 Hong Kong’s Legislative Council passed The Stablecoins Bill, setting an effective date in the fourth quarter. Just a day earlier the United States Senate voted 66-32 to advance the GENIUS Act—formally, the Guiding and Establishing National Innovation for U.S. Stablecoins Act—toward full-floor debate. Although the bills were written an ocean apart, both rest on the same tripod: every issuer must obtain a licence, must hold fully matched reserves, and must give users clear redemption rights. Beyond that shared architecture the two texts diverge sharply in purpose and tone, revealing what each jurisdiction really wants from digital cash.

How the Two Regimes Would Actually Work

Hong Kong’s new law covers any fiat-referenced coin issued inside the city or marketed as tracking the Hong Kong dollar. Licences will be issued by the Hong Kong Monetary Authority, and retail distribution is limited to intermediaries that the HKMA explicitly designates. Issuers have to segregate customer funds, hold one-to-one high-quality liquid assets, submit to ongoing audits, and redeem at par on the same day a request is made. A six-month grace window lets existing projects slip into compliance, but unlicensed issuance after that becomes a criminal offence.

The GENIUS Act casts an even wider net: any U.S.-dollar stablecoin offered to a U.S. person falls under its umbrella, no matter where the token originates. Issuers would choose between a new federal charter and an opt-in state framework, but the penalties for operating without either charter would be felonious. Reserves can sit only in cash, deposits at the Federal Reserve, or short-dated Treasuries, and balances must be reported daily. The draft also welds stablecoin activity to the Bank Secrecy Act, mandates OFAC screening, and bars large non-financial enterprises—think Big Tech firms bigger than seventy-five-billion dollars in market capitalisation—from controlling more than a quarter of any issuer. Where Hong Kong already runs a supervisory sandbox, Washington is still haggling over rule-writing authority, so advertising standards, custody specifics, and yield-bearing wrappers remain to be fleshed out.

Divergent Motives Beneath Similar Rules

United States

Washington’s instinct is defensive rather than invitational. Dollar-pegged stablecoins already settle more than ten trillion dollars a year, mostly outside U.S. regulatory reach. Congress views that offshore liquidity as both an opportunity and a threat: it wants the flow to stay denominated in dollars but routed through pipes that regulators can inspect. By giving issuers a federal charter and, crucially, access to Fed deposits and T-bills, the GENIUS Act tries to anchor the burgeoning stable-asset economy firmly to U.S. capital markets. The legislation also reins in any prospect of a Big-Tech stablecoin that might one day compete with bank money or, worse, with the Federal Reserve itself.

Hong Kong

Hong Kong’s overriding aim is to reinforce its claim to be Asia’s tokenisation hub. By wrapping stablecoins in a familiar banking-law perimeter it hopes to coax global banks, payment processors, and blue-chip Web3 firms to launch pilot HKD coins under the HKMA’s wing; the sandbox already lists JD.com, Animoca Brands, and Standard Chartered as participants. If the experiment works, the city can funnel Asian trade flows through compliant, near-instant digital cash while reassuring Beijing that monetary sovereignty is preserved.

Who Stands to Gain — or Lose

Large commercial banks and payment companies come out looking strongest. They already understand liquidity, compliance, and balance-sheet segregation, so meeting reserve rules is merely capital allocation. A licensed “HSBC-HKD” or “PayPal-USD” could arrive as soon as the ink dries. Well-funded crypto natives such as Circle and Paxos should manage the transition too, but smaller issuers may find the cost of dual licensing prohibitive. For retail users the upside is obvious: audited backing, clear redemption promises, and far fewer opportunities for a Terra-style collapse. DeFi protocols, meanwhile, will endure a short-term headache of whitelisting and wrapped tokens; in exchange they gain assets that institutional money is finally allowed to touch.

The next twelve months will revolve around three open questions. First, how quickly can Hong Kong’s sandbox graduate to fully licensed HKD coins, and will mainland businesses be permitted to tap that liquidity? Second, can U.S. lawmakers keep bipartisan momentum long enough to shepherd the GENIUS Act through both chambers—and will the final text explicitly allow tokenised T-Bill wrappers that pay a yield, blurring the line between stablecoins and money-market funds? Third, if both regimes do launch, nothing prevents a real-time FX corridor in which a Hong Kong dollar token atomically swaps against a federally regulated U.S. dollar token, compressing Asian-U.S. settlement from two days to twenty seconds.

Stablecoins began life as a crypto side quest, a hack to move dollars between exchanges at the speed of the internet. In 2025 they are morphing into regulated, sovereign-linked digital cash. Hong Kong is positioning itself as the controlled playground where Asian innovation can flourish under watchful supervision; the United States is racing to keep the dollar’s network effect dominant by folding stablecoins into the federal banking stack. If both succeed, the balance you see in MetaMask or Alipay may soon carry the same legal certainty as a bank deposit—only faster, programmable, and globally interoperable. The lab experiment is ending; mainstream finance is next.