According to Techub News, according to Ta Kung Pao, the Hong Kong Treasury Bureau stated that in view of the important role of fiat stablecoins in the Web3 and virtual asset ecosystem, and the increasingly close connection between the traditional financial system and the virtual asset market, the SAR government needs to establish a regulatory system for fiat stablecoin issuers and conduct supervision in a risk-based and pragmatic manner.

The three main requirements include reserve management and stabilization mechanisms (for example, requiring issuers to ensure that fiat stablecoins are fully backed by high-quality and highly liquid reserve assets), redemption requirements, and regulatory requirements such as governance, knowledge and experience.

The Hong Kong Financial and Treasury Bureau also suggested that only licensed fiat currency stablecoin issuers, banks, licensed corporations, and licensed virtual asset trading platforms can sell fiat currency stablecoins in Hong Kong or actively promote related services to the Hong Kong public.

For existing stablecoin issuers, the proposed regulatory regime will also have corresponding transitional arrangements. The Treasury Bureau also hopes that an appropriate regulatory regime for fiat stablecoin issuers that complies with international regulatory recommendations can provide sufficient protection for users to address potential risks to monetary and financial stability, and allow Hong Kong’s virtual asset ecosystem to develop sustainably and responsibly.