Hong Kong Proposes Regulatory Framework for Stablecoin Issuers
The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) have jointly released the consultation conclusions on a legislative proposal to implement a regulatory regime for fiat-referenced stablecoin (FRS) issuers in Hong Kong, according to the Hong Kong Monetary Authority.
Public Consultation and Feedback
During the two-month public consultation period, which concluded in February 2024, the authorities received 108 submissions from various market participants, industry associations, business and professional organizations, and other stakeholders. A significant majority of respondents agreed on the necessity of a regulatory framework for FRS issuers, citing the increased prevalence and evolving development of virtual assets (VAs). The respondents emphasized the importance of managing potential monetary and financial stability risks and ensuring transparent and suitable regulatory guardrails.
The proposed regulatory requirements and implementation arrangements garnered general support, with some respondents suggesting further enhancements to the proposal.
Statements from Key Officials
Mr. Christopher Hui, Secretary for Financial Services and the Treasury, remarked, “In addition to the existing regulatory regime for VA trading platforms, the establishment of a licensing regime for FRS issuers will further strengthen the VA regulatory framework in Hong Kong in line with international standards and effectively mitigate possible financial stability risks associated with FRS issuance activities.”
Echoing this sentiment, Mr. Eddie Yue, Chief Executive of the HKMA, stated, “We are grateful for the respondents’ valuable comments and are encouraged by the general support for the proposed regulatory regime. We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”
Next Steps
The FSTB and the HKMA plan to incorporate the feedback and suggestions from the consultation into the final legislative proposal. The aim is to introduce a bill to the Legislative Council as soon as possible to establish the regulatory regime formally.
The consultation conclusions are available on the websites of the FSTB and the HKMA. Additionally, the HKMA is processing applications for the stablecoin issuer sandbox, with the list of sandbox participants expected to be announced shortly.
