Hong Kong has handed a landmark invoice to control fiat-backed stablecoins, signaling its continued push to place itself as a world hub for digital finance.
On Might 21, Hong Kong lawmaker Johnny Ng confirmed that the Legislative Council authorised the invoice after its third studying. The brand new regulation is predicted to take impact earlier than the tip of 2025.
Licensing regime
The brand new framework introduces a licensing regime for stablecoin issuers by means of the Hong Kong Financial Authority (HKMA). It provides a transitional interval for companies to adapt, apply for licenses, and meet regulatory expectations.
As soon as the principles are in impact, solely licensed entities can be allowed to subject fiat-referenced stablecoins in or tied to the Hong Kong greenback, no matter their geographic location.
The transfer seeks to instill confidence, transparency, and powerful compliance requirements throughout the metropolis’s rising digital asset ecosystem.
He mentioned:
“Hong Kong’s stablecoins are backed by fiat forex as underlying property, and we welcome international enterprises and establishments occupied with issuing stablecoins to use in Hong Kong.”
In the meantime, Ng confused the invoice is a place to begin for broader Web3 improvement within the area. He said that the federal government plans to work carefully with private-sector gamers to design use instances and promote stablecoin adoption.
Hong Kong’s stablecoin invoice
The Hong Kong authorities mentioned the brand new framework requires any entity issuing a fiat-referenced stablecoin (FRS) tied to the Hong Kong greenback to fulfill strict operational requirements.
These embody clear asset segregation, redemption at par worth, and a dependable mechanism for sustaining value stability.
They have to additionally adjust to anti-money laundering legal guidelines, threat administration protocols, disclosure obligations, and impartial auditing necessities. As well as, solely licensed corporations can promote or promote these merchandise to the general public.
Christopher Hui, Secretary for Monetary Companies and the Treasury, mentioned the regulation adopts a risk-based regulatory mannequin that aligns with international requirements.
He added that this strategy will assist create a safer person surroundings, promote long-term trade progress, and strengthen Hong Kong’s fame as a number one worldwide monetary hub.
