Financial regulators in Hong Kong have released plans for monitoring stablecoin issuers via a licencing system and a regulatory sandbox in order to provide potential issuers with “supervisory expectations and guidance on compliance”.
By February 29th, the Financial Services and the Treasury Bureau (FSTB), the Hong Kong Monetary Authority (HKMA), and the central bank of the jurisdiction are looking for input. A kind of cryptocurrency called fiat-referenced stablecoins aims to keep its value constant with sovereign currencies like the US or Hong Kong dollars.
Hong Kong wants to establish itself as a hub for cryptocurrency in the region. In June, it put into effect a licencing system for cryptocurrency service providers, acknowledging retail cryptocurrency trading as a regulated activity. For a while now, the authority has been developing regulations for stablecoins backed by fiat.
Legislation enacting the regime will mandate that issuers who satisfy specific requirements apply for a licence from the HKMA. A licence is required for businesses that want to offer stablecoins to the general public in Hong Kong, issue fiat-referenced stablecoins in the city, or issue dollar-referenced stablecoins in Hong Kong.
“We are supportive of financial innovation and believe that it is essential to put in place the necessary regulatory guardrails and standards to enable the long-term, sustainable and responsible development of the virtual asset ecosystem,” HKMA CEO Eddie Yue said in a statement.