China Establishes Stablecoin Supervision Framework with Hong Kong as Pilot

China has taken a significant step towards regulating the stablecoin sector by endorsing coordinated supervision efforts in Hong Kong, utilizing the Hong Kong Monetary Authority (HKMA) to oversee code compliance and third-party audits. This move comes into effect on August 1st, 2025. The framework emphasizes licensed operators for fiat-backed stablecoins targeted at Hong Kong retail investors, with over forty applications exceeding initial expectations. Mainland China’s alignment with the policies marks a shift in its regulatory approach to stablecoin management and is expected to significantly reshape the market landscape.