Hong Kong Launches Public Consultation on Regulation of Stablecoins
Hong Kong’s Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) have initiated a public consultation to gather feedback on a proposed legislative framework for regulating stablecoins and their issuers. The aim is to introduce licensing requirements for fiat-referenced stablecoin (FRS) issuers.
The legislation seeks to establish conditions for FRS issuers, requiring them to obtain a license before offering Hong Kong dollar-referenced stablecoins or issuing an FRS in the jurisdiction. It also grants the Monetary Authority the power to approve stablecoins before they can be offered to retail investors.
If approved, the proposed regulations will also ban the advertising of FRS by unlicensed entities and stablecoin offerings by non-specified licensed entities.
The government states that this regulatory proposal is necessary due to the growing importance of stablecoins in the web3 and virtual asset ecosystem, as well as the increasing integration between traditional finance and the virtual asset market.
Hot Take: Hong Kong Proposes Licensing Requirements for Stablecoin Issuers
Hong Kong is seeking public opinion on a new legislative proposal aimed at regulating stablecoins and their issuers. The proposed regulations would require stablecoin issuers to meet specific conditions and obtain a license before offering Hong Kong dollar-referenced stablecoins or issuing fiat-referenced stablecoins. Additionally, the Monetary Authority would have the authority to approve stablecoins prior to their availability to retail investors. The proposed framework also prohibits advertising of stablecoins from unlicensed entities. This move comes as stablecoins continue to play a significant role in the virtual asset ecosystem, necessitating proper management of monetary and financial stability risks.
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