Hong Kong Proposes Regulatory Framework for Stablecoin Issuers

• The Hong Kong Financial Authority and the Monetary Companies and Treasury Bureau collectively launched a public session on stablecoins.
• The session goals to assemble insights on a proposed legislative framework for regulating issuers of stablecoins.
• The proposed framework, primarily based on a risk-based and agile strategy, features a licensing regime.

The Hong Kong Financial Authority (HKMA) and the Monetary Companies and Treasury Bureau (FSTB) are accumulating public touch upon a proposed authorized framework for regulating stablecoin issuers. 

As stablecoins are more and more taking part in an important position in bridging the hole between conventional finance and digital property, the Hong Kong authorities thinks it’s crucial to control them. Using a versatile and risk-based strategy, the urged framework goals to regulate threats to financial and monetary stability.

The proposal establishes a licensing system that requires fiat-referenced stablecoin (FRS) issuers to meet specific necessities with a purpose to get a license from the Financial Authority (MA). Moreover, the proposed framework stipulates that solely sure licensed companies could present FRs, and retail buyers can solely entry the stablecoins which can be licensed by the MA.

The proposal additionally consists of promoting restrictions, prohibiting the promoting of FRS issuance by unlicensed entities and non-specified licensed entities’ providing of FRS. 

Alongside the general public session, the HKMA will introduce a sandbox association. This platform will talk supervisory expectations, provide steering on compliance, and procure suggestions from entities desiring to difficulty FRS in Hong Kong. 

Authorities representatives have emphasised the significance of those actions. The Secretary for Monetary Companies and the Treasury, Christopher Hui, underlined their significance in selling the expansion of the Web3 ecosystem.

Within the meantime, the HKMA’s Chief Government, Eddie Yue, emphasised the necessity for legislative boundaries to advertise the moral and sustainable development of the digital asset ecosystem.

The session interval begins on December 27, 2023, and lasts till February 29, 2024. The general public, in addition to trade individuals, are invited to supply feedback via designated channels.