Aiming for greater regulation of the cryptocurrency industry in Hong Kong, city authorities have released a proposal in which stablecoin issuers will be required to obtain a license. A consultation document was jointly released by the Hong Kong Monetary Authority, Financial Services and the Treasury Department on December 27.
Authorities highlighted that the purpose of the public consultation document is to gather views on the legislative proposal to regulate stablecoin issuers in Hong Kong. The consultation period began today and runs until February 29, 2024.
According to the text, a stablecoin issuer must obtain a license from the HKMA “if it issues a stablecoin that references the value of one or more fiat currencies in Hong Kong”.
“Given the important roles played by stablecoins in the Web3 and virtual asset (VA) ecosystem, and the growing interconnectivity between the traditional financial system and VA markets, the Government considers that a regulatory regime for benchmarked stablecoins should be introduced. fiat currency (FRS issuers). Bringing FRS issuers into the regulatory framework under an agile, risk-based approach will facilitate adequate management of potential monetary and financial stability risks and provide transparent and appropriate protections with the increasing prevalence of VAs”, he explained.
Treasury and Financial Services Secretary Christopher Hui said: “With the implementation of the licensing regime for VA trading platforms from June this year, the legislative proposal to regulate the FRS is another important measure that facilitates the development of the Web3 ecosystem in Hong Kong. With relevant licensing, supervision and enforcement parameters in place, the actual and potential risks associated with stablecoin development in Hong Kong could be appropriately managed in line with international standards,” he said.
It is worth remembering that Hong Kong is advancing the development of stablecoins and has plans to release stablecoin regulations by mid-2024.
Hong Kong Establishes Regulatory Framework for ETFs
In a strategic move, Hong Kong has made significant progress in regulating cryptocurrency exchange-traded funds (ETFs), a step ahead of the United States. The Hong Kong Securities and Futures Commission (SFC), in collaboration with the city’s Monetary Authority, has outlined strict requirements for the launch of these financial products.
The statement issued at the beginning of the month details the conditions under which the SFC will approve ETFs with more than 10% interest in crypto assets. Regulators highlighted the rapid global evolution of the digital asset market and the growing demand for these products in Hong Kong.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading cryptocurrencies carries a risk of financial loss.