The Hong Kong Government has officially published the Stablecoins Bill in the Gazette on December 6, aiming to establish a comprehensive regulatory regime for fiat-referenced stablecoins (FRS). The legislation represents a significant step toward enhancing the regulatory framework for virtual asset (VA) activities in Hong Kong.
Objectives of the Bill
The Stablecoins Bill is designed to:
- Address potential financial stability risks posed by FRS.
- Ensure robust user protection mechanisms.
- Leverage the benefits of virtual assets and their underlying technologies.
Under the proposed licensing regime, any individual or entity conducting the following activities must obtain a license from the Hong Kong Monetary Authority (HKMA):
- Issuing FRS within Hong Kong in the course of business.
- Issuing FRS that claim to maintain a stable value relative to the Hong Kong dollar in the course of business.
- Actively marketing the issuance of FRS to the public in Hong Kong.
Additionally, the Bill empowers the HKMA with supervision, investigation, and enforcement authority to ensure effective implementation.
The Secretary for Financial Services and the Treasury, Mr. Christopher Hui, emphasized the importance of the legislation:
“The proposal is essential for Hong Kong in fulfilling our obligations as a member of the Financial Stability Board. Adhering to the ‘same activity, same risks, same regulation’ principle, this risk-based approach aims to foster a robust regulatory environment, aligning with Hong Kong’s VA development strategy.”
Echoing these sentiments, the Chief Executive of the HKMA, Mr. Eddie Yue, remarked:
“Extensive consultations with industry stakeholders have informed the development of this regulatory regime. A well-regulated environment will support the sustainable and responsible growth of the stablecoin ecosystem in Hong Kong.”
Next Steps
The Stablecoins Bill is scheduled for its first reading in the Legislative Council on December 18, marking the beginning of its legislative journey.
This development underscores Hong Kong’s commitment to establishing itself as a leader in the virtual asset space while safeguarding financial stability and consumer interests.
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