Hong Kong has transitioned to a more stringent regulatory framework for stablecoins, impacting non-institutional participants significantly. The Hong Kong Monetary Authority (HKMA) now views stablecoins, particularly fiat-backed ones, as potentially systemic payment instruments. This shift requires issuers to obtain licenses from the Hong Kong Financial Services Authority (FSA) and meet high capital and reserve requirements, effectively filtering out non-compliant assets. Non-institutional participants face challenges in trading stablecoins like USDT and USDC on licensed platforms due to complex due diligence processes. These stablecoins must have reserve assets held by independent custodians and a legally recognized redemption mechanism. The regulatory environment aims to prevent risks from unlicensed stablecoins entering the financial system, ensuring that compliant stablecoins become the primary medium for domestic transactions. The new framework also emphasizes the importance of compliance in banking transactions, with banks conducting rigorous checks on the source of funds. Licensed stablecoins offer a "regulatory certainty" that minimizes compliance costs and risks, providing a safer environment for non-institutional participants. As Hong Kong prepares to issue its first fiat-backed stablecoin licenses, the market is expected to prioritize these compliant assets, reshaping the transaction landscape for retail participants.