Hong Kong to Establish Stablecoin Issuer Guidelines by 2024
Hong Kong is taking a different approach to cryptocurrency compared to China, with local politician Duncan Chiu stating that the territory is expected to introduce guidelines for stablecoin issuers by mid-2024. Chiu, a member of Hong Kong’s Legislative Council, revealed that significant progress has been made towards finalizing the guidelines, with lawmakers currently engaged in a second round of consultations on the matter. This stands in contrast to China, which has vacillated between hostility and acceptance of crypto. While the Chinese central bank issued a ban on digital currencies in September 2021, it later recognized crypto as legal property.
Hong Kong’s Crackdown on Unlicensed Operations
If Chiu’s predictions come true, it will be positive news for firms and exchanges seeking opportunities in Hong Kong’s growing fintech and crypto markets. However, the establishment of stablecoin issuance guidelines does not indicate a lax regulatory approach. The Hong Kong Monetary Authority (HKMA) recently issued a stern warning against unlicensed businesses that may falsely present themselves as banks or crypto banks. Such actions violate Section 97 of the territory’s Banking Ordinance. The HKMA emphasized that only licensed banks and authorized institutions can conduct banking or deposit-taking activities in Hong Kong. Placing funds in accounts held by unlicensed crypto firms claiming to be banks carries significant risks and does not enjoy protection under the Hong Kong Deposit Protection Scheme.
Hot Take: Hong Kong Embraces Stablecoins Amidst Chinese Opposition
In contrast to China’s hostile stance towards cryptocurrencies, Hong Kong is positioning itself as a more crypto-friendly jurisdiction by working towards establishing stablecoin issuer guidelines. This move demonstrates Hong Kong’s recognition of the potential benefits and lucrative opportunities associated with stablecoins. However, while embracing stablecoins, Hong Kong remains vigilant against unlicensed operations and warns against fraudulent entities claiming to be banks. By striking a balance between regulation and innovation, Hong Kong aims to create a supportive environment for the growth of its fintech and crypto markets.
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