effect – Earlybirds Invest

Reserve Requirements and Issuer Obligations

The regulatory framework mandates full reserve backing with high-quality, liquid assets such as cash, bank deposits, or government securities held in the same currency as the stablecoin. These reserves must be segregated from the issuer’s own funds, held in trust, and shielded from creditor claims.

Issuers are prohibited from paying interest on stablecoins but may offer non-interest-based incentives. They must be locally incorporated with key personnel based in Hong Kong and meet minimum capital requirements of HKD 25 million or 1% of the total stablecoin issuance, whichever is greater. Redemption at par within one business day is required under normal conditions.

The Hong Kong Monetary Authority has launched a consultation on accompanying guidelines, including measures related to anti-money laundering and counter-terrorism financing.

Hong Kong is emerging as a global leader with one of the toughest regulatory frameworks for stablecoins. We spoke to HashKey’s Vivien Wong on what this means for stablecoins, cross-border payments, and HK’s digital finance future.#HongKong #Stablec…https://t.co/QEIPwW5d5q

— Cryptonews.com (@cryptonews) June 3, 2025

Hong Kong Leaps Ahead in Regulating Stablecoins

“The upcoming implementation of the Ordinance heralds a structured regulatory environment for stablecoin operations,” said Secretary for Financial Services and the Treasury Christopher Hui. He described the law as a “significant milestone” in advancing Hong Kong’s digital asset ambitions.

The stablecoin ordinance forms part of a broader push by the city to establish comprehensive regulatory clarity around crypto assets, with more nations likely to follow. Currently, the US congress is in the middle of passing the Genius Act which will regulate stablecoins in the country in a similar manner as to Hong Kong.

Weekly Bitcoin (BTC) purchases by Strategy have little to no measurable effect on BTC’s market price, according to VanEck’s head of digital assets research Matthew Sigel.

Sigel pointed out that Strategy-related only accounted for 8.4% of average weekly volume, a figure skewed by four weeks where purchases exceeded 20%.

However, Strategy represented just 3.3% of activity in most weeks, and did not buy BTC in eight of the 27 weeks analyzed.

Analysis of weekly Strategy BTC acquisitions. (Source: VanEck’s Matthew Sigel)

As a result, Sigel reported a 25% correlation coefficient between Strategy’s weekly Bitcoin purchases and BTC’s end-of-week price and a 28% correlation with BTC’s weekly price change.

Both figures suggest only weak associations that lack predictive or explanatory strength in understanding Bitcoin’s broader price behavior.

Sigel’s analysis also addressed the broader relationship between Bitcoin mining volumes, fund purchases, and secondary market activity.

Over the past 27 weeks, Bitcoin’s secondary trading volumes have been nearly 20x greater than newly mined Bitcoin volumes. Even after factoring in Strategy’s purchases, secondary market activity remained approximately 17x larger than aggregate new supply.

The findings challenge the assumption that structured Bitcoin acquisition programs have a material influence on short-term price action.

Instead, Bitcoin’s price appears driven primarily by broader secondary market forces, consistent with asset market behaviors where large, liquid trading venues dilute the impact of isolated supply or demand events.