Hong Kong races ahead with new stablecoin regulatory framework

Hong Kong has moved nearer to formalizing its stablecoin laws, publishing a invoice in its authorities gazette on December 6 that creates a transparent framework for issuers and entrepreneurs.

Stablecoins have change into helpful instruments for cross-border transactions, with Normal Chartered just lately calling them the crypto business’s “killer app.”

Beneath the brand new invoice, stablecoin issuers and entrepreneurs should get hold of licenses from the Hong Kong Financial Authority (HKMA). This requirement extends to stablecoins pegged to the Hong Kong greenback. Issuers should preserve reserves with native banks, though the HKMA could sometimes allow international custody preparations.

The laws outlines strict compliance measures, together with a minimal paid-up capital of HK$25 million (over $3 million). Issuers should additionally exhibit sturdy monetary well being, liquidity and danger administration capabilities. Actions comparable to misrepresentation to advertise stablecoins are prohibited to make sure shopper safety and market integrity.

As well as, the HKMA will probably be given higher powers to observe, examine and implement compliance with this framework.

The initiative displays Hong Kong’s dedication to tackling monetary dangers whereas selling innovation. Officers have emphasised that the framework aligns with worldwide requirements and embodies a precept of making use of constant laws to related actions and dangers.

Christopher Hui, Minister of Monetary Companies and the Ministry of Finance, identified that the proposal is consistent with the precept of “similar exercise, similar dangers, similar laws”. This ensures that the framework meets world requirements and strengthens Hong Kong’s place as a number one monetary centre.

Eddie Yue, Chief Government of the HKMA, emphasised that the invoice incorporates suggestions from business consultations and goals to advertise sustainable progress throughout the stablecoin ecosystem.

The invoice can have its first studying within the Legislative Council on December 18. If handed, Hong Kong will be part of early movers such because the European Union and Japan in regulating stablecoins, whereas surpassing different jurisdictions such because the US, which haven’t but carried out related frameworks. .

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