Key Insights
- Hong Kong’s financial authorities to release results of stablecoin consultation and draft legislative proposal for industry oversight.
- Proposed regulations include licensing requirements for stablecoin issuers and restrictions on retail sales to specific entities.
- The move follows HKMA’s regulatory sandbox launch in March, aiming to develop risk-based requirements for sustainable stablecoin sector growth.
HONG KONG (MarketsXplora) – Hong Kong’s financial regulators are set to release the results of a stablecoin consultation report, paving the way for a legislative proposal to oversee the rapidly evolving digital asset industry, the Financial Services and the Treasury Bureau (FSTB) announced on Monday.
The forthcoming publication will build on a December consultation that proposed all fiat-referenced stablecoin issuers obtain a license from the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank.
In its statement, the FSTB outlined plans to restrict the sale of fiat-referenced stablecoins to retail users, limiting this activity to licensed stablecoin issuers, authorized institutions such as banks, licensed corporations, and licensed cryptocurrency trading platforms.
The proposal aims to establish comprehensive oversight of stablecoin issuers, encompassing reserve management, stability mechanisms, redemption processes, and governance structures.
This development follows the HKMA’s March launch of a regulatory sandbox for stablecoin issuers, designed to inform future regulations. HKMA Chief Executive Eddie Yue emphasized the sandbox’s role in developing “fit-for-purpose and risk-based regulatory requirements” to promote sustainable growth in the stablecoin sector.
Industry response has been positive, with Vincent Chok, CEO of FDUSD stablecoin issuer First Digital, noting strong market demand and significant interest from potential applicants for Hong Kong’s stablecoin licensing.
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