According to Techub News, the Hong Kong Legislative Council's Web3 and Virtual Asset Development Subcommittee proposed a stablecoin issuer regulatory system. The proposed stablecoin issuer regulatory system aims to: address the potential risks posed by fiat stablecoins to monetary and financial stability; provide adequate protection for fiat stablecoin users; formulate an appropriate and internationally compliant regulatory system for fiat stablecoin issuers; and provide a clear legal and regulatory environment to promote the sustainable and responsible development of Hong Kong's virtual asset ecosystem.

Under the proposed system, all activities related to issuing fiat stablecoins in Hong Kong, issuing Hong Kong dollar stablecoins, and actively promoting fiat stablecoins to the Hong Kong public will require a license. The main regulatory requirements include: full reserve backing and investment restrictions; segregation and custody of reserve assets; risk management and control procedures; regular disclosure and reporting mechanisms; audit requirements for reserve assets; redemption requirements and contingency plans; suitability of senior management and corporate governance requirements.

The Government will carefully consider the feedback from the public consultation and incorporate it into the draft bill as appropriate, and plans to submit the relevant draft bill to the Legislative Council for deliberation by the end of 2024. The Government and the HKMA will continue to communicate with the industry to understand the latest market developments to ensure the robustness, compliance and sustainable development of Hong Kong's stablecoin ecosystem.