Hong Kong to Publish Consultation on Regulation for OTC Crypto Trading Platforms
Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, has announced that the local government will soon release a consultation on a proposed regulatory framework for over-the-counter (OTC) crypto trading platforms. Hui highlighted the accessibility of OTC venues to the general public and the involvement of some platforms in fraudulent activities. He emphasized the need to bring OTC venues under regulation and stated that a consultation on the proposed regulatory framework would be launched soon.
Hong Kong’s Crypto Licensing Regime
In June 2023, Hong Kong implemented its crypto licensing regime for virtual asset trading platforms, granting licenses to two platforms: HashKey and OSL. Existing platforms were given a transitional period before the licensing system took effect and were required to submit license applications by February 29. Hui warned that as the deadline approaches, the Securities and Futures Commission is preparing for enforcement work and will increase publicity efforts.
Stablecoin Consultation
In December, the Hong Kong Monetary Authority (HKMA) stated in a joint consultation paper with the Financial Services and the Treasury Bureau that stablecoin issuers would require a license if their stablecoin references the value of one or more fiat currencies in Hong Kong. The consultation period is set to end at the end of this month. Hui also mentioned that the HKMA plans to introduce a sandbox to explore stablecoin issuance with industry players in the region.
Hot Take: The Importance of Stablecoins in Finance
Eddie Yue, chief executive of the HKMA, previously highlighted that stablecoins could serve as a bridge between traditional finance and the virtual asset market. If stablecoins become widely adopted as a payment option, integration between digital payments and the real economy will increase, making the stability of stablecoins even more crucial.
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