Hong Kong’s FSTB and HKMA plan a new regulatory framework for stablecoin issuers, responding to stakeholder feedback and broad public acceptance.
The Hong Kong Monetary Authority (HKMA) and the Financial Services and Treasury Bureau (FSTB) have published their findings regarding creating regional stablecoin-related laws.
The first legislative proposal to establish a legal framework for Hong Kong’s fiat-referenced stablecoin (FRS) issuers was followed up on by the two financial institutions on July 17.
This comes after a two-month public consultation phase that attracted 108 comments from stakeholders, such as industry associations, professional organizations, and market participants and concluded in February.
Most submission respondents concurred that FRS issuers must be subject to a regulatory framework to manage potential economic and financial stability risks and guarantee open and efficient oversight.
Overall encouragement and suggestions
Respondents provided additional recommendations and supported the proposed regulatory requirements and implementation arrangements.
According to FSTB Secretary Christopher Hui, the new FRS issuer license program will supplement the current regulatory framework for virtual asset (VA) trading platforms.
Hui stated that it would assist in reducing the risks to financial stability connected with stablecoin issuing and “further strengthen” the VA regulatory environment in Hong Kong by international norms.
Hong Kong ecosystem for stablecoins
The HKMA’s CEO, Eddie Yue, thanked everyone for their feedback and underlined how strongly the proposed regulatory framework is supported. This legal framework is anticipated to foster a responsible and sustainable stablecoin ecosystem in Hong Kong. He declared:
“We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”
To deliver a bill to the legislative council as quickly as possible, the FSTB and the HKMA stated they would include the input in the final legislative proposal.
Furthermore, the HKMA said it is considering applications for June; Hong Kong requested input from specialists worldwide on several crucial facets of creating Web3 policies, including striking a balance between the technical, legal, and regulatory frameworks. A stablecoin issuer sandbox will soon make the participant list public.
Regulators in Hong Kong have actively monitored and closely supervised the digital asset market.
The seven cryptocurrency trading platforms the HKSFC claims are operating without licenses and have raised concerns about investor safety were added to its alert list on July 15.