Hong Kong’s financial regulators have taken a significant step towards regulating the stablecoin industry by releasing consultation conclusions on a proposed licensing regime for stablecoin issuers. This move is part of the city’s broader legislative effort to transform and regulate its digital asset sector.
On Wednesday, July 17, the Hong Kong Monetary Authority (HKMA), the Treasury Bureau, and Financial Services issued a joint statement revealing that a majority of respondents supported the introduction of a regulatory regime for fiat-referenced stablecoin (FRS) issuers in the region. This conclusion follows a two-month public consultation that ended in February and received 108 submissions from industry participants and expert institutions.
The core of the proposal requires all FRS issuers to obtain a license from the HKMA. In response to requests for clarity on the scope of the regulatory regime, the HKMA stated it would consider multiple factors in determining whether an individual is ‘actively marketing’ FRS issuance to Hong Kong residents. These factors include the target audience, domain names used, and the language of marketing messages.
The regulators have announced their intention to finalize the proposal and submit a bill to Hong Kong’s Legislative Council soon, signalling a swift move towards implementation.
This development follows the HKMA’s publication of a public consultation document five months ago, which proposed stricter regulations for over-the-counter (OTC) crypto trades. These regulations aim to align with Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), which has been in effect since June of the previous year.
The proposed OTC regulations seek to limit the sector to spot trades of virtual assets for fiat currency, while crypto trading would fall under the purview of the regular virtual asset trade provider (VATP) license. Notably, peer-to-peer (P2P) trading would be classified separately from OTC transactions.
Hong Kong’s proactive approach to regulating stablecoins and the broader cryptocurrency market reflects the city’s ambition to establish itself as a leading hub for digital asset innovation while maintaining robust regulatory standards.
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