The bill on Stablecoin in Hong Kong has been submitted to the Legislative Council, marking an important step in establishing a comprehensive regulatory framework for stablecoins in this region.
On December 6, the Hong Kong government announced the bill in the Gazette of the Special Administrative Region, taking another step towards becoming official law. By December 18, the bill had been submitted to the Legislative Council of Hong Kong for its first reading.
Before being signed into law, the bill will undergo three readings, including necessary debates, examinations, and amendments. After passing the third reading, the bill will be submitted to the regional Chief Executive, who has the authority to sign and promulgate it as official law.
The Legislative Council will conduct three readings before submitting the bill to the Chief Executive | Source: Legislative Council
Key components of the Stablecoin bill
The Stablecoin bill consists of three main components: licensing and regulatory requirements for stablecoin issuers, a specific stablecoin offering process, and marketing restrictions along with consumer protection measures.
If the bill is signed into law, stablecoin issuers in Hong Kong will need to obtain a license from the Hong Kong Monetary Authority (HKMA), the region's central bank, and must meet strict requirements to qualify for licensing.
The regulatory authority will evaluate factors such as the issuing entity, control entities, resources, reserve assets, and the mechanism for stabilizing the value of stablecoins. Only licensed organizations and platforms will have the right to issue or market stablecoins in Hong Kong.
This bill also introduces consumer protection measures, affecting many market participants, including issuers and distributors.
If the bill is passed, Hong Kong may witness a change similar to that in Europe, where regulations on the Cryptocurrency Asset Market (MiCA) have brought about a significant shift in the stablecoin market.
On December 18, research firm Kaiko and the Netherlands-based exchange Bitvavo reported that the emergence of MiCA has significantly changed the stablecoin landscape in the region. While issuers like Tether have ceased issuing Euro-backed stablecoins, MiCA-compliant organizations have flourished. By November 2024, MiCA-compliant stablecoins dominated the market, with stablecoins from Circle, Societe Generale, and Banking Circle holding up to 91% market share.
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