What Reserve Assets Must Hong Kong Licensed Stablecoin Issuers Hold?

Key takeaways

• Under section 5(2) of Schedule 2 to the Stablecoins Ordinance, the market value of each reserve pool must at all times be at least the par value of outstanding stablecoins of that type.
• Eligible assets are cash, bank deposits up to three months, high-quality government-type debt with no more than one year to maturity, overnight reverse repos and dedicated funds holding these.
• Reserve assets must be segregated and held under a trust, supported by an independent legal opinion, with qualified custodians such as licensed banks.
• Issuers prepare daily statements, report weekly to the HKMA and publish the same information, with external attestation reports due within one month of each period.
• Valid redemption requests must normally be processed within one business day, at par less permitted fees.

What are the key facts on HKMA stablecoin reserves?

Hong Kong's Stablecoins Ordinance requires licensed issuers of fiat-referenced stablecoins to hold full, segregated, high-quality reserves. The HKMA's August 2025 guideline turns the statutory minimum criteria into detailed expectations on assets, trust arrangements, custody, reporting and redemption, and is the main working document for issuers.

What does full backing mean?

The market value of the reserve pool must always be at least the par value of the stablecoins outstanding.

The HKMA guideline, issued under section 171(4) of the Stablecoins Ordinance, explains that section 5(2) of Schedule 2 requires the market value of each reserve pool to be at least equal to the par value of the outstanding stablecoins of that type at all times. The HKMA expects licensees to hold a buffer of over-collateralisation above that line, scaled to the risk of the assets. A reserve made mostly of cash and short deposits needs a smaller buffer than one with more one-year securities, whose prices move with interest rates. Valuation should be prudent and use reliable prices, with the bid price where applicable. Custodial fees should not be deducted from reserve accounts in a way that erodes the backing, and stablecoins temporarily frozen, for example by court order, must still be fully backed.

Which assets are eligible?

High-quality, highly liquid assets with minimal investment risk, listed in paragraph 2.3.1 of the guideline.

Tokenised forms of eligible assets may qualify if the licensee shows the HKMA they meet the same quality, liquidity and risk criteria. Reserves must be held in the referenced currency; a currency mismatch needs the HKMA's prior written approval.

How must reserves be segregated and held?

In a separate pool for each stablecoin, under a trust, with qualified custodians such as licensed banks.

Sections 5(1) and 5(4) of Schedule 2 require each stablecoin's reserve assets to be segregated from other reserve pools and from the licensee's other assets, and protected against other creditors in all circumstances. The guideline requires a trust arrangement, through an independent trustee or a declaration of trust, supported by an independent legal opinion submitted to the HKMA before implementation and refreshed on material changes. The opinion should confirm that the reserve assets would be held for holders and available for redemption at par if the licensee became insolvent. Income and losses from managing the reserve belong to the licensee, and the trust should include a mechanism for releasing excess assets above the licensee's internal target. Custodians must be qualified: a licensed bank or another custodian acceptable to the HKMA. Outsourcing custody or investment management does not move responsibility away from the licensee.

What must be reported and disclosed?

Daily statements available on request, weekly reports to the HKMA mirrored on the website, and external attestation reports within one month.

Each attestation tests the last business day of the period and at least one randomly selected business day, so the reserve must be right on every day, not only at period end.

What liquidity and risk management is expected?

Internal limits on liquidity, credit and market risk, quarterly stress tests and prompt notice of prolonged limit breaches.

The guideline does not set numerical liquidity ratios. Instead, the licensee sets its own internal limits and indicators, such as a cash ratio and the share of assets convertible to cash within set timeframes, plans for normal, stressed and intraday conditions, and notifies the HKMA if a limit is breached for a prolonged period, for example more than one business day. Stress tests must run at least quarterly, with results submitted to the board and the HKMA. Our guide to Hong Kong SVF float shows the HKMA's parallel approach for stored value facilities.

How quickly must stablecoins be redeemed?

Within one business day of a valid request, unless the HKMA approves otherwise, which is among the fastest redemption standards of any major regime.

Holders have the right to redeem at par, and rights that must remain exercisable on insolvency: to direct disposal of the reserve pool for pro rata redemption, and to claim against the licensee for any shortfall. Valid requests must be honoured without unreasonable fees or conditions and, unless otherwise approved, processed within one business day. Payment is par value less permitted fees, in the referenced currency, and every drawdown of reserves must match a reduction in outstanding stablecoins.

How do the HKMA rules compare with the US and EU?

They are close to the US list of eligible assets but more prescriptive than MiCA on reporting and redemption speed.

Our guides to GENIUS Act eligible reserves and EMT reserves for e-money institutions cover the other two regimes.

How does a daily reserve check work?

It values each eligible asset at market, excludes anything ineligible, applies the buffer target and compares the pool with par value outstanding.

Worked example. A licensee has HK$2,000 million of Hong Kong dollar stablecoins outstanding and an internal over-collateralisation target of 2%.

The eligible pool exactly equals par value, so the statutory test is met, but the six-month deposit does not count and the licensee is HK$40 million below its own 2% buffer. It replaces the six-month deposit with eligible assets and adds HK$40 million, restoring HK$2,040 million. If the shortfall against par had persisted, the licensee would need to report it to the HKMA immediately under paragraph 2.7.5.

What should a licensed stablecoin issuer check?

These checks follow sections 2, 3 and 6 of the guideline. Each one should be tied to a named owner and to evidence that can be shown to the HKMA on request, because the guideline expects daily statements to be ready at any time, not prepared after a question arrives.

• Value each reserve pool at market daily against par value outstanding, with a buffer.
• Confirm every asset falls within the eligible categories and the referenced currency.
• Keep each stablecoin's pool segregated under a trust supported by a current legal opinion.
• Use licensed banks or other HKMA-acceptable custodians.
• Prepare daily statements, report weekly and publish the same figures.
• Run stress tests at least quarterly and set internal liquidity limits.
• Process valid redemptions within one business day and match each drawdown to tokens burned.

Our guides to the Hong Kong Stablecoins Ordinance and MAS stablecoin reserve requirements compare the frameworks.

How does Safeheld help?

Safeheld reconciles stablecoins outstanding to reserve accounts and custodian holdings every day, by currency and pool, and flags any day the pool falls below par or the buffer target.

See daily reconciliation.

Frequently asked questions

How much reserve must a Hong Kong stablecoin issuer hold?

Reserve assets with a market value at least equal to the par value of outstanding stablecoins of that type at all times, under section 5(2) of Schedule 2 to the Stablecoins Ordinance, with a buffer expected by the HKMA.

Which assets can back a Hong Kong stablecoin?

Cash, bank deposits of up to three months, high-quality government-type debt with no more than one year to maturity, overnight reverse repos, dedicated funds holding these, and other assets the HKMA accepts.

Must reserves be held in trust?

Yes. The HKMA requires a trust arrangement, through an independent trustee or a declaration of trust, supported by an independent legal opinion.

How often must reserves be reported?

Daily statements must be ready on request, the HKMA receives weekly reports unless it agrees otherwise, and the same information is published on the issuer's website.

How quickly must redemptions be processed?

Within one business day of a valid request, unless the HKMA approves otherwise.

Can reserves be in a different currency from the stablecoin?

Only with the HKMA's prior written approval. Reserves should normally be in the referenced currency.

Who keeps the income earned on reserve assets?

The licensee. The guideline states that income and losses from managing reserve assets belong to the licensee, and the trust should allow excess assets above its internal target to be released to it.

When did the Stablecoins Ordinance take effect?

The HKMA said in June 2025 that it was expected to come into effect on 1 August 2025, when licence applications opened.

References

• HKMA, Guideline on Supervision of Licensed Stablecoin Issuers (August 2025, PDF)
• HKMA, Robust and sustainable development of stablecoins (23 June 2025)

About Safeheld

Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For licensed stablecoin issuers it reconciles supply, reserve pools and custodians every day and keeps the daily statements behind each weekly report. To discuss your digital asset operations, contact us at safeheld.com/contact.

This article is general information on Hong Kong stablecoin rules and is not legal or regulatory advice.