Hong Kong’s financial regulators said they have concluded a consultation period on a licensing program initiative for fiat reference-based stablecoin (FRS) providers.
The consultation, which ended in February, received 108 submissions from various stakeholders, including market participants, industry associations and professional bodies.
The Monetary Authority (HKMA) and the Financial Services and Treasury Bureau (FSTB) announced this development in a joint statement on July 17.
Stablecoin licensing regime
The regulators stated that most respondents agreed that a regulatory regime for FRS issuers was necessary given the rapid rise of drastic digital assets in recent years. They believe that this will manage potential monetary and financial stability risks and ensure transparent and appropriate safeguards.
Furthermore, most respondents also supported the proposed regulatory requirements and implementation arrangements required by these stablecoin issuers. The regulators wrote:
“FRS, compared to other types of stablecoins (e.g. commodity-linked or precious metal-linked stablecoins), is considered a system with greater potential to be developed as a widely acceptable means of payment and therefore carries a higher and more threatening monetary and financial stability. risks.”
Christopher Hui, secretary of the FSTB, noted that the licensing regime would strengthen Hong Kong’s digital asset framework. He also emphasized that it is in line with international standards, promotes financial stability and limits losses.
The financial regulators said they will take all feedback into consideration when finalizing the legislative proposal for the regulatory regime and aim to submit a bill to the Legislative Council soon.
This announcement follows the launch of Hong Kong’s stablecoin sandbox program in March. HKMA is processing applications for the sandbox and the list of participants will be announced soon.
Meanwhile, these efforts reflect Hong Kong’s push to become a hub for crypto innovation. Hong Kong remains one of the few regions focused on regulating the crypto industry, making it a favorable destination for industry participants.