Hong Kong has proposed that stablecoin issuers be required to obtain a license in the city as part of a legislative proposal to oversee the industry.
in consultation documents According to a joint announcement today by the Hong Kong Monetary Authority (the de facto central bank), the Financial Services Authority and the Treasury Department, the authority will grant licenses from the HKMA to stablecoin issuers if they issue stablecoins that: He said he should receive it. It refers to the value of one or more fiat currencies in Hong Kong.”
Under the proposed regime, such licensees must be locally incorporated with management and have effective stabilization mechanisms in place, “such as maintaining a pool of high-quality and highly liquid reserve assets through appropriate management agreements”. HKMA said.
“Only stablecoins issued by licensed issuers may be offered to retail investors,” the regulator added.
The HKMA said it had published its latest consultation document after ‘taking into account’ feedback collected from relevant members of the public. discussion document It was released in January 2022. We are also planning to launch a ‘sandbox’ in Hong Kong for those interested in issuing stablecoins, with further details to be announced soon.
Authorities plan to collect public comments on the legislative proposals until February 29, 2024.
seeking more power
The bill proposal also suggested that authorities should be given “necessary powers” to “adjust the parameters of stablecoins and activities within their scope.”
Taking into account the potential impact that a default or failure by a fiat-referenced stablecoin issuer could have on the financial system, the document states, “it is proposed that the HKMA be empowered to intervene in the operations of license holders where circumstances warrant.” It says, “It’s done.” .
Hong Kong lawmaker Johnny Ng expressed concern. post X said regulators should take into account the fact that some major global stablecoins are already circulating in the market.
“If these global stablecoin companies do not apply for a license in Hong Kong within the specified period, the relevant regulators should consider how such international stablecoins can be traded on licensed exchanges in Hong Kong,” Ng said. Failure to do so may impact the overall operation and volume of cryptocurrency exchanges, leading to unintended consequences in the market.”
Improved regulatory clarity
Unlike neighboring mainland China’s widespread crackdown on cryptocurrency trading and mining, Hong Kong has rolled out the welcome mat for cryptocurrency companies this year. Encouraging banks to cooperate with them. Last June, Hong Kong officially launched a cryptocurrency licensing regime for virtual asset trading platforms, allowing licensed exchanges to offer retail trading services.
Last week, the HKMA and the Securities and Futures Commission stated in a joint circular: We are ready to begin accepting applications In the case of spot cryptocurrency exchange-traded funds (ETFs). Some industry leaders say Hong Kong You can be one of the first leaders Asia accepts spot Bitcoin ETFs If the US approves such an ETF.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.