Hong Kong is poised to introduce a new regulatory regime for fiat-referenced stablecoin (FRS) issuers following positive feedback from a public consultation.
The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) concluded the consultation, which saw 108 submissions from a broad range of stakeholders during a two-month period ending in February. The consensus supports a framework to mitigate potential financial instabilities and enhance transparency within the stablecoin market.
Christopher Hui, the Secretary for Financial Services and the Treasury, emphasised that the establishment of a licensing regime for FRS issuers would complement existing virtual asset (VA) trading platforms’ regulations.
He said, “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.”
Echoing Hui’s sentiment, Eddie Yue, the Chief Executive of the HKMA, expressed gratitude for the feedback and optimism about the proposed regulatory measures. “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.”
The FSTB and the HKMA are now set to finalise the legislative proposal, aiming to introduce a bill to the Legislative Council promptly. In tandem, the HKMA is processing applications for its stablecoin issuer sandbox, with plans to announce the participants soon.
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