Hong Kong to Enforce Mandatory Licensing for Stablecoin Issuers

• Hong Kong Regulators Propose Supervisory Measures for Stablecoin Issuers
• Role of Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau (FSTB)
• Hong Kong's Position as a Regional Crypto Hub
• Legislation Requirements for Issuers
• Support for Financial Innovation

Hong Kong Regulators Propose Supervisory Measures for Stablecoin Issuers

The financial regulatory bodies in Hong Kong have released proposals to supervise stablecoin issuers. These measures include a licensing system and a regulatory sandbox. The goal is to articulate supervisory expectations and guidance on compliance to prospective issuers.

Role of Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau (FSTB)

The central bank of Hong Kong, the HKMA, alongside the Financial Services and the Treasury Bureau (FSTB) are seeking feedback on these proposals by February 29. An important focus of their regulation will be fiat-referenced stablecoins. These are a form of cryptocurrency designed to maintain their value equal to sovereign currencies such as the U.S. or Hong Kong dollar.

Hong Kong's Position as a Regional Crypto Hub

Through these regulatory proposals, Hong Kong is aiming to establish itself as a key crypto hub within the region. In June, it introduced a licensing framework for crypto service providers, recognising retail crypto trading as a regulated activity. The jurisdiction has been considering regulations for fiat-backed stablecoins for some time.

Legislation Requirements for Issuers

The proposed regime will require issuers to meet specific conditions to obtain a license from the HKMA. Those wishing to issue a fiat-referenced stablecoin in Hong Kong, issue a Hong Kong dollar-referenced stablecoin, or market stablecoins to the Hong Kong public will have to secure a license to operate.

Support for Financial Innovation

We are supportive of financial innovation and believe that it is essential to establish the necessary regulatory guardrails and standards to enable the long-term, sustainable and responsible development of the virtual asset ecosystem, stated Eddie Yue, CEO of HKMA.

Edited by Jonathan Stoker