Hong Kong Drafts Stablecoin Rules to Secure a Crypto Hub Future
Hong Kong's Legislative Council is actively discussing a new bill aimed at regulating stablecoins, a crucial step in the region's ambitious plan to become a leading global hub for the cryptocurrency industry. The proposed legislation, which had its first reading in December, outlines licensing requirements for stablecoin issuers and mandates robust reserve mechanisms to ensure stability and investor protection.
Crafting the Rules: Lawmakers and Officials Discuss Stablecoin Regulations
A dedicated Legislative Council committee convened on Tuesday to delve into the specifics of the "Stablecoins Bill," with key government officials participating in the discussions. According to local newspaper Da Kung Pao, Francis Ho, Deputy Secretary for Financial Services and the Treasury (FSTB), stated that regulators intend to require stablecoin issuers to obtain a license from the Hong Kong Monetary Authority (HKMA).
The bill also emphasizes the importance of reserve stability, mandating that stablecoin issuers maintain reserves composed of high-quality, highly liquid assets. This focus on stability aims to safeguard the value of stablecoins and build trust among users.
A Welcoming Ecosystem: Crypto Licensing and Sandbox Initiatives
Hong Kong has been actively courting crypto businesses, rolling out a licensing regime for crypto trading platforms in 2023. The HKMA also launched a sandbox program for stablecoin issuers last March, attracting participants like Standard Chartered Bank, Animoca Brands, Hong Kong Telecommunications, Jingdong Coinlink, and RD InnoTech.
Beyond Stablecoins: A Holistic Approach to Crypto Regulation
Simultaneously, another Legislative Council subcommittee met on Tuesday to discuss the existing licensing framework for crypto trading platforms. Joseph Chan, the FSTB's undersecretary, announced that the Securities and Futures Commission will establish a consultation panel for these platforms to ensure their "views and needs are fully considered."
Chan also revealed that authorities are considering regulating over-the-counter (OTC) crypto trading, having completed the first round of public consultation last year. A second round of consultation is planned for this year. Furthermore, the authorities are drafting licensing regulations for crypto custodians, with plans to release them for public consultation in 2025.