FinTech Association of Hong Kong Supports HKMA's Risk-Based Approach to Regulate Stablecoins

blockchain.news:

The FinTech Association of Hong Kong (FTAHK) has published a response to the Hong Kong Monetary Authority's (HKMA) January discussion paper on crypto assets and stablecoins.

The FTAHK said that it is in principle supportive of the HKMA's proposed risk-based approach to regulating payment-related stablecoins.

In January, Blockchain.News reported that in order to make its stance known about stablecoins, the HKMA published a discussion paper in which it solicited the public’s contributions to its proposed regulatory approach to digital currencies and stablecoins in particular.

The report added, as per the published paper, the HKMA acknowledged the steady growth in the market capitalization of stablecoins which is pegged close to $150 billion, up significantly from less than $20 billion back in January 2020.

In response, the FTAHK has made recommendations to the HKMA.

It suggested the HKMA adopt a «substance (or function) over form» approach when considering whether such stablecoins should be regulated under existing or equivalent licensing regimes.

The FTAHK has also recommended that the HKMA’s proposed regime regulates “primary activities” rather than “secondary activities”.

The «primary activities» include the issuance, creation, or destruction of payment-related stablecoins, or activities that are linked to the management of stabilization activities in relation to stablecoin value.

The FTAHK has also suggested that the HKMA continue working with global and local crypto-related regulators and standard-setting bodies to create a coordinated regulatory regime consistent with global standards.

It said that creating a coordinated regulatory regime will help avoid overlap and confusion and to prevent regulatory arbitrage while