Hydrothermal carbonization (HTC) has developed considerably over the last 15 years and offers a viable alternative for the utilization of municipal and industrial organic waste such as sewage sludge. However, the technology has yet to establish itself as a valorization process for waste biomasses (2024) and is not yet a recognized state of the art. Nevertheless, the HTC technology could gain greater relevance in the future, especially as an alternative valorization pathway for sewage sludge. During HTC, significant amounts of HTC process water (PW) are produced as a byproduct. The process water is inorganically and organically polluted and has to be treated, as it would be a burden on water bodies and thus on the environment if left untreated. In the EU and specifically Germany, industrial wastewater producers like HTC-plant operators are obliged to treat their industrial wastewater before discharging it into the environment. In addition to a large amount of PW and its treatment to the required limits, the organic load and possible persistent and toxic substances pose major challenges for plant operators. Many proven processes from industrial wastewater treatment were transferred for the treatment of PW. Treatment of the PW in a manner that is industrially viable, economically viable, and efficient is crucial for the effective commercialization of HTC technology. In this, the challenges and opportunities of PW composition, management, and treatment, including legal aspects, are mainly discussed. Therefore, the legal framework in the European Union and specifically for Germany will be elaborated. Furthermore, different treatment pathways are also highlighted.