After concluding a consultation period over a licensing program initiative for fiat-referenced stablecoin (FRS) providers, Hong Kong’s financial regulators have received 108 submissions from various stakeholders. The Monetary Authority (HKMA) and the Financial Services and Treasury Bureau (FSTB) announced this development in a joint statement on July 17.
Most respondents agreed that a regulatory regime for FRS issuers was necessary to manage potential monetary and financial stability risks. The rapid rise of digital assets in recent years has led to the need for transparent and suitable safeguards. The regulators stated that FRS, in comparison to other types of stablecoins, has a greater potential to be developed as a commonly acceptable means of payment. This poses higher and more imminent monetary and financial stability risks.
Christopher Hui, FSTB Secretary, emphasized that the licensing regime would bolster Hong Kong’s digital asset framework. By aligning with international standards, promoting financial stability, and mitigating losses, Hong Kong aims to become a hub for crypto innovation. The regulators will consider all feedback in finalizing the legislative proposal for the regulatory regime and intend to introduce a bill to the Legislative Council soon.
In March, Hong Kong launched a stablecoin regulatory sandbox program. HKMA is currently processing applications for the sandbox, and the list of participants will be announced shortly. These efforts showcase Hong Kong’s commitment to regulating the crypto industry, making it an attractive destination for industry participants who value stability and regulatory oversight.
The consultation period for the licensing program initiative for fiat-referenced stablecoin providers in Hong Kong has brought to light the importance of implementing a regulatory regime to manage monetary and financial stability risks. By aligning with international standards and promoting financial stability, Hong Kong is positioning itself as a key player in the crypto industry. The forthcoming legislative proposal and regulatory regime will provide clarity and transparency for stablecoin issuers and industry participants, further solidifying Hong Kong’s reputation as a favorable destination for crypto innovation.
