Hong Kong to Present Regulatory Framework for Stablecoins
Hong Kong’s financial regulators have received over 100 submissions from market participants, with a vast majority endorsing the establishment of a licensing regime for stablecoins.
Consultation Feedback
The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) released results of a consultation paper on a proposal to introduce a regulatory regime for stablecoin issuers. According to a Wednesday press release, a “vast majority” of the 108 respondents agreed that, with the increased prevalence and evolving development of virtual assets, a regulatory regime should be introduced for them issuers.
Regulatory Impact
HKMA chief executive Eddie Yue stated that a well-regulated environment could be “conducive” to the “sustainable and responsible development of the stablecoin ecosystem in Hong Kong.” The FSTB and the HKMA noted that they would consider the feedback in finalizing the legislative proposal for implementing the regulatory regime. Reports indicate that the framework will be presented to lawmakers by the end of this year.
Current Regulatory Landscape
Hong Kong currently lacks a specific regulatory framework for stablecoin issuers, although the HKMA acts as the primary regulatory body overseeing the regulation of stablecoins and other cryptocurrencies in the region. Under the new proposal, stablecoin issuers in Hong Kong would be required to obtain a license. However, it remains uncertain if they will be allowed to keep reserve assets with banks licensed in Hong Kong or in other jurisdictions.
Digital Yuan Pilot
Meanwhile, China is speeding up its pilot of the central bank digital currency, also known as digital yuan, in Hong Kong‘s local shops. Hong Kong residents only, allowing them to top up digital wallets with up to 10,000 CNY (approximately $1,380) through 17 retail banks in Hong Kong, including Standard Chartered Bank, ZA Bank, and DBS Bank.
