PANews reported on July 15 that according to Hong Kong News, the Hong Kong Financial Services and the Treasury Bureau stated that after the licensing system for virtual asset service providers came into effect in June last year, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority consulted the public on the proposed regulatory system for Hong Kong stablecoin issuers at the end of last year, and will soon publish a consultation summary to prepare a draft bill for deliberation by the Legislative Council.
The Treasury Bureau pointed out that it hopes that an appropriate regulatory regime for fiat stablecoin issuers that complies with international regulatory recommendations can provide adequate protection for fiat stablecoin users and address the potential risks posed by fiat stablecoins to monetary and financial stability, so that Hong Kong's virtual asset ecosystem can develop sustainably and responsibly.
Given the important role of fiat stablecoins in the Web3 and virtual asset ecosystems, and the increasingly close connection between the traditional financial system and the virtual asset market, there is a need for the government to establish a regulatory system for fiat stablecoin issuers. The main requirements include: reserve management and stabilization mechanisms, including 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.
At the same time, in order to protect the users of fiat stablecoins, it is recommended that only the following institutions can sell fiat stablecoins in Hong Kong or actively promote related services to the Hong Kong public: licensed fiat stablecoin issuers; authorized institutions (i.e. banks); licensed corporations; and licensed virtual asset trading platforms. For existing stablecoin issuers, the proposed regulatory system will also have corresponding transitional arrangements.