The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) have released the consultation conclusions on the legislative proposal to regulate fiat-referenced stablecoin (FRS) issuers in Hong Kong.
This follows a two-month public consultation period, which received 108 submissions from market participants and stakeholders.
The majority of respondents supported the introduction of a regulatory regime for FRS issuers aimed at managing potential monetary and financial stability risks and providing transparent safeguards.
The proposed regulatory requirements received broad approval, with some suggestions for enhancements.
“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, “
said Christopher Hui, Secretary for Financial Services and the Treasury.
“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,”
said Eddie Yue, Chief Executive of the HKMA.
The Hong Kong stablecoin regulation proposal includes provisions for managing reserve assets, full backing requirements, risk management, and disclosure and reporting obligations.
It also sets out the criteria for licensing and the responsibilities of fiat-referenced stablecoin issuers in maintaining a robust stabilization mechanism in Hong Kong.
The FSTB and HKMA will incorporate the feedback into the final legislative proposal, aiming to introduce a bill to the Legislative Council later this year.
The consultation conclusions on the Hong Kong stablecoin regulation are available on the FSTB and HKMA websites. Additionally, the HKMA is processing applications for the stablecoin issuer sandbox, with a list of participants to be announced soon.
Featured image credit: Edited from Freepik