Hong Kong set to release stablecoin consultation results, paving way for regulation

Hong Kong’s financial authorities will soon release the results of a stablecoin consultation report as part of the region’s legislative proposal to oversee the industry.

The Financial Services and the Treasury Bureau said today in a statement that it will soon publish the results of a December consultation on stablecoin issuers in an attempt to draft a legislative bill to be submitted to the Legislative Council. The regulators proposed at the time that all fiat-referenced stablecoin issuers should obtain a license from the Hong Kong Monetary Authority, the de facto central bank that co-released the stablecoin consultation.

The FSTB added in the Monday statement that it suggested only certain entities — including licensed stablecoin issuers, authorized institutions such as banks, licensed corporations and licensed crypto trading platforms —  would be allowed to sell fiat-referenced stablecoins to retail users.

The proposal also intends to include rules that would oversee stablecoin issuers in aspects such as reserve management, stability mechanisms, redemption and governance, according to the statement.

The expected proposal follows the HKMA’s March launch of a sandbox for stablecoin issuers in a bid to pave the way for future relevant regulations. Eddie Yue, chief executive of the HKMA, said at the time that the sandbox could help “facilitate the formulation of fit-for-purpose and risk-based regulatory requirements, which is key to promoting the sustainable and responsible development of the stablecoin issuance business.” 

Vincent Chok, chief executive officer of First Digital, the issuer of FDUSD stablecoin, told The Block in March that the company saw a “good” market demand. “We know that there are a lot of people that are lining up to apply for this Hong Kong stablecoin licensing as well,” he said.