Hong Kong Government Seeks Public Input on Legislation for Stablecoin Supervision
The Financial Services and the Treasury Bureau (FSTB), and the Hong Kong Monetary Authority (HKMA) have jointly introduced a public consultation paper outlining a legislative proposal to regulate issuers of stablecoins. This move is prompted by the increasing prominence of stablecoins within the Web3 and virtual asset (VA) ecosystems, coupled with the growing interconnection between traditional financial systems and VA markets.
The public consultation period for the proposed legislative measures commenced on December 27, 2023, and will run until February 29, 2024. Throughout this period, industry participants and the general public are encouraged to provide comments on the regulatory proposal.
The primary objective of the proposed regulatory regime is to address potential monetary and financial stability risks associated with stablecoins while establishing appropriate guidelines for the expanding virtual asset landscape.
Key features of the proposed legislative framework include the introduction of a new piece of legislation to implement a licensing regime. Under this regime, all issuers of fiat-referenced stablecoins (FRS) meeting specific conditions will be required to obtain a license from the Monetary Authority (MA).
The consultation paper outlines that only specified licensed entities will be permitted to offer FRS, and such stablecoins licensed by the MA can be provided to retail investors. The proposal further restricts the advertising of FRS issuance by unlicensed entities or non-specified licensed entities offering FRS.
The regulatory framework equips authorities with the necessary powers to adjust stablecoin parameters and activities in response to the rapid evolution of the virtual asset market. Additionally, it
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