Hong Kong Proposes Licensing Stablecoin Issuers
Hong Kong has put forward a legislative proposal that would require stablecoin issuers to obtain a license in the city. The Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau jointly published a consultation paper stating that stablecoin issuers would need a license if their stablecoin references the value of fiat currencies in Hong Kong. The proposed regime would require licensed issuers to be locally incorporated and have an effective stabilization mechanism in place. Retail investors would only be able to invest in stablecoins issued by licensed issuers.
Seeking More Powers
The legislative proposal also suggests granting authorities the necessary powers to adjust parameters and intervene in the operations of stablecoin licensees if warranted. This proposal has raised concerns among some lawmakers, who argue that major global stablecoins already circulating in the market should be considered. They suggest allowing these international stablecoins to be traded on licensed exchanges in Hong Kong to avoid unintended consequences.
Regulatory Clarity in Hong Kong
In contrast to China’s crackdown on cryptocurrency, Hong Kong has been welcoming crypto firms and encouraging banks to work with them. The city implemented a crypto licensing regime for virtual asset trading platforms earlier this year. Recently, the HKMA and the Securities and Futures Commission announced their readiness to accept applications for spot crypto exchange-traded funds (ETFs). Industry leaders believe that Hong Kong could become one of the first Asian countries to allow spot bitcoin ETFs if the US approves such products.
Hot Take: Hong Kong Proposes Licensing for Stablecoin Issuers
Hong Kong is taking steps towards regulating stablecoins by proposing that issuers obtain licenses. The proposed regime aims to ensure stability and protect retail investors. While some lawmakers express concerns about existing global stablecoins, Hong Kong continues to embrace the crypto industry. This move follows the city’s implementation of a licensing regime for virtual asset trading platforms and its readiness to accept applications for spot crypto ETFs. Hong Kong could become a leading player in Asia if it approves spot bitcoin ETFs, pending US approval.
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