Hong Kong Reveals New Stablecoin Legislation

The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) released their conclusions on establishing local stablecoin-related legislation.

On July 17, these institutions built on an initial legislative proposal aimed at creating a regulatory framework for fiat-referenced stablecoin (FRS) issuers in Hong Kong.

This step follows a two-month public consultation period ending in February, which received 108 submissions from various stakeholders, including market participants, industry associations, and professional organizations.

Most respondents agreed that a regulatory regime for FRS issuers is necessary to manage potential monetary and financial stability risks and ensure transparent and effective oversight.

Overall, the proposed regulatory requirements and implementation arrangements received general support from respondents, along with additional suggestions.

Christopher Hui, the secretary for the FSTB, mentioned that the new licensing regime for FRS issuers would complement the existing regulatory measures for virtual asset (VA) trading platforms.

Hui stated it would “further strengthen” the VA regulatory framework in Hong Kong, aligning with international standards and helping mitigate financial stability risks associated with stablecoin issuance.

Eddie Yue, the CEO of the HKMA, expressed gratitude for the feedback received and highlighted the strong support for the proposed regulatory regime, which is expected to promote a sustainable and responsible stablecoin ecosystem in Hong Kong. He said:

“We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”

The FSTB and the HKMA plan to incorporate the feedback into the final legislative proposal, aiming to present a bill to the legislative council soon.

Additionally, the HKMA is reviewing applications for a stablecoin issuer sandbox and will soon publicize the list of participants.

Hong Kong regulators have been proactive in monitoring and regulating the digital asset industry.

On July 15, the Hong Kong Securities and Futures Commission updated its alert list to include seven crypto trading platforms operating without licenses and raised concerns over investor safety.

In June, Hong Kong sought feedback on various critical aspects of Web3 policy development, including balancing technical, legal, and regulatory frameworks from experts worldwide.

Sources:

https://cointelegraph.com/news/hong-kong-unveils-new-stablecoin-licensing-regime

https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/07/20240717-3/