The Hong Kong Treasury Bureau said that in view of the important role of fiat stablecoins in Web3 and the virtual asset ecosystem, as well as the closer connection between the traditional financial system and the virtual asset market, the SAR government needs to establish a regulatory system for fiat stablecoin issuers, which is risk-based and pragmatic. The three main requirements include reserve management and stabilization mechanisms (such as requiring issuers to ensure that fiat stablecoins are fully backed by high-quality and highly liquid reserve assets), redemption requirements, and regulatory requirements such as governance, knowledge and experience. The FCA also proposes that only licensed fiat currency stablecoin issuers, banks, licensed corporations, and licensed virtual asset trading platforms should be allowed to sell fiat currency stablecoins in Hong Kong or actively promote their services to the public in Hong Kong. For existing stablecoin issuers, the proposed regulatory regime will also provide corresponding transitional arrangements. The FCA also expects that a regulatory regime for fiat currency stablecoin issuers that is appropriate and in line with international regulatory recommendations can provide users with sufficient protection against latent risks to monetary and financial stability, so that the virtual asset ecosystem in Hong Kong can develop sustainably and responsibly.