Hong Kong Regulator Proposes Legislation for Fiat-Referenced Stablecoins
On July 17, the Financial Services and Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) jointly announced their conclusions on the consultation process regarding the proposed regulatory framework for issuers of fiat-referenced stablecoins (FRS) in Hong Kong. These regulations will apply to stablecoin providers operating both domestically and internationally.
According to the press release, the HKMA plans to introduce a regulatory framework for fiat-backed stablecoin issuers.
Today, the HKMA and the Financial Services & the Treasury Bureau jointly released the consultation conclusions on the legislative proposal to implement the regulatory regime for #stablecoin issuers in #HongKong, after receiving over 100 submissions from industry stakeholders. pic.twitter.com/mXNijvTEW7
— HKMA 香港金融管理局 (@hkmagovhk) July 17, 2024
This initiative is driven by the growing adoption of stablecoins among Hong Kong citizens, who use them for daily transactions as an alternative to the Hong Kong Dollar.
In line with the legislative proposal released on Wednesday, foreign stablecoin providers will be required to establish a physical presence in Hong Kong, maintain custody reserves in local banks in the country, and avoid paying interest to holders.
According to the Hong Kong Monetary Authority Chief Executive, Eddie Yue:
“We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”
Meanwhile, non-Hong Kong incorporated companies that wish to obtain a license would need to set up a subsidiary in Hong Kong.
The Hong Kong Monetary Authority believes implementing these measures will enhance transparency and accountability among stablecoin providers,
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