On 6 December 2024, the Hong Kong Government announced the publication of the Hong Kong Stablecoins Bill in the Gazette, aiming to establish a regulatory framework for fiat-referenced stablecoins within its jurisdiction. The Hong Kong Stablecoins Bill, if enacted in its current form, would introduce a licensing regime requiring individuals or entities involved in issuing fiat-referenced stablecoins as part of a business in Hong Kong; issuing stablecoins pegged to the Hong Kong dollar; or marketing stablecoin issuances to the public in Hong Kong, to obtain authorisation from the Hong Kong Monetary Authority (HKMA). The Hong Kong Stablecoins Bill, if enacted in its current form, would grant the HKMA, the powers to supervise, investigate, and enforce compliance within the regulatory framework.
The HKMA and the Hong Kong Government have, over the past three years, worked to address the risks and opportunities presented by stablecoins within the broader framework of virtual assets.
The first paper resulting from the HKMA’s groundworkwas the HKMA’s discussion paper on Hong Kong crypto-assets and stablecoins, issued on12 January 2022inviting public input on the potential benefits and risks of these technologies. The paper outlined considerations for regulatory intervention and initiated a dialogue on the future of stablecoins in Hong Kong.
Following this, on 31 January 2023, the HKMA released its conclusions on the discussion paper on Hong Kong crypto-assets and stablecoins, consolidating feedback from stakeholders. These conclusions identified the need for a regulatory regime that balances innovation with financial stability.
On 27 December 2023, the HKMA launched a public consultation on a legislative proposal to regulate stablecoin issuers and simultaneously announced the introduction of a sandbox arrangement. The sandbox was designed to allow participants to test their stablecoin-related business models and technologies in a controlled environment.
By 12 March 2024, the stablecoin issuer sandbox was officially launched, which provided a structured framework for experimentation.
The consultation process culminated on 17 July 2024 with the release of the paper on consultation conclusions on Legislative Proposal to Implement the Regulatory Regime for Stablecoin Issuers in Hong Kong. These conclusions set out the principles underpinning the proposed regulatory regime and clarified the expectations for stablecoin issuers operating in Hong Kong.
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, stated: “The legislative proposal is essential for Hong Kong in fulfilling our obligations as a member of the Financial Stability Board. Adhering to the ‘same activity, same risks, same regulation’ principle, this risk-based proposal aims to promote a robust regulatory environment, which is in line with Hong Kong’s approach to VA development.”
The Chief Executive of the Hong Kong Monetary Authority, Mr Eddie Yue, stated in his statement: “We have undertaken extensive consultations and given due consideration to the views of the industry when formulating the details of the regulatory regime. We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”
The Hong Kong Stablecoins Bill is scheduled to be introduced into the Legislative Council of Hong Kong for its first reading on 18 December 2024.
(Source: https://www.info.gov.hk/gia/general/202412/06/P2024120500406.htm)
