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On 27 December 2023, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) jointly announced the Consultation Paper on the Legislative Proposal to Implement the Regulatory Regime for Stablecoin Issuers in Hong Kong (Consultation). The Consultation takes into account the feedback received on the HKMA Discussion Paper on Crypto-assets and Stablecoins dated January 2022 (Original Consultation) and the Conclusion of Discussion Paper on Crypto-assets and Stablecoins dated January 2023 (Prior Conclusions).
The Consultation proposes a standalone regulatory regime (Proposed Regime) focusing on fiat-referenced stablecoins (FRS). The four key policy objectives for the Proposed Regime include putting in place appropriate safeguards to address potential monetary and financial stability risks posed by FRS, providing adequate protection to FRS users, putting in place a regulatory regime that is in line with international regulatory recommendations1 and fostering sustainable and responsible development of the virtual asset (VA) ecosystem in Hong Kong by providing legal and regulatory clarity. The Proposed Regime introduces a new licensing regime on FRS issuers, which represents an important extension of scope to the existing VA regulatory regime. We discuss the Consultation in more depth below.
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1 The HKMA and FSTB have in particular referenced the FSB Global Regulatory Framework for Crypto-asset Activities - Financial Stability Board published on 17 July 2023.
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