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COINTURK NEWS > Cryptocurrency Law > Hong Kong Government Takes Steps to Regulate Stablecoins
Cryptocurrency Law

Hong Kong Government Takes Steps to Regulate Stablecoins

In Brief

  • Hong Kong initiates public consultation on stablecoin regulation.

  • Proposed framework addresses financial stability and market risks.

  • Legal adjustments aim for compliance and market alignment.

COINTURK NEWS
COINTURK NEWS 1 year ago
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The Hong Kong government is taking significant steps towards regulating stablecoins with a public consultation period that will last from December 27, 2023, to February 29, 2024. The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) have jointly released a public consultation paper outlining legislative proposals for the supervision of stablecoin issuers.

Contents
Navigating the Evolving Landscape of StablecoinsKey Features of the Legislative ProposalLegal Regulation for Enhanced Oversight

Navigating the Evolving Landscape of Stablecoins

The Hong Kong government, recognizing the vital role of stablecoins in the Web3 and crypto asset (VA) ecosystem and the increasing integration of traditional financial systems with crypto asset markets, deemed it necessary to introduce a regulatory framework for fiat-referenced stablecoin (FRS) issuers.

The proposed regime aims to manage potential monetary and financial stability risks while creating transparent and appropriate guidelines to cope with the increasing prevalence of crypto assets.

Key Features of the Legislative Proposal

The legislative proposal includes feedback from the market, responses to the “Discussion Paper on Crypto Assets and Stablecoins” published by the HKMA last year, ongoing stakeholder engagements, local market conditions, and international standards. The key features are as follows:

  • Licensing Regime: The introduction of a new law to implement a licensing regime and making it mandatory for all stablecoin issuers that meet certain conditions to obtain a license from the Monetary Authority (MA).
  • Individual Investor Restrictions: Making it mandatory that stablecoins can only be offered by certain licensed entities and only MA-licensed stablecoins can be presented to individual investors.
  • Advertising Bans: Prohibiting the advertising of stablecoin issuance by unlicensed entities or unspecified licensed entities offering stablecoins.
  • Adjustable Parameters: Granting authorities the power to adjust stablecoin parameters and activities in accordance with the rapidly evolving crypto market.
  • Transitional Arrangements: Providing a transitional arrangement to facilitate the implementation of the regulatory regime.

Legal Regulation for Enhanced Oversight

In addition to the legislative proposals, the HKMA will proceed with a legal regulation. This initiative aims to convey audit expectations, provide guidance on compliance, and collect feedback from organizations genuinely interested in issuing FRS in Hong Kong. Thus, it targets to ensure that the proposed regulatory regime is practical and aligned with market needs.

The Financial Secretary Christopher Hui emphasized the importance of these regulatory measures in promoting the development of the Web3 ecosystem in Hong Kong. HKMA Chief Executive Eddie Yue also reiterated this sentiment, highlighting the importance of a regulatory stance while supporting financial innovation.

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Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.

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COINTURK NEWS 27 December, 2023 - 1:06 pm 27 December, 2023 - 1:06 pm
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