Hong Kong to present regulatory framework for stablecoins by 2025

Hong Kong’s financial regulators have received more than 100 applications from market participants, with the vast majority approving the establishment of a licensing regime for stablecoins.

The Financial Services and Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) have published the results of a consultation paper on a proposal to introduce a regulatory regime for stablecoin issuers.

According to a press release on Wednesday, the “vast majority” of 108 respondents agreed that with the increasing prevalence and evolving development of virtual assets, a regulatory regime for stablecoin issuers should be introduced. HKMA director-general Eddie Yue noted that a well-regulated environment could be “conducive” to the “sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”

The FSTB and HKMA have said they will take feedback into account when finalising the proposed legislation to implement the regulatory regime. Reports suggest the framework will be presented to lawmakers by the end of this year.

Hong Kong currently lacks a specific regulatory framework for stablecoin issuers, but the HKMA acts as the primary regulatory body overseeing the regulation of stablecoins and other cryptocurrencies in the territory. Under the new proposal, stablecoin issuers in Hong Kong would be required to obtain a license. However, it remains unclear whether they would be allowed to hold reserve assets in banks licensed in Hong Kong or other jurisdictions.

Meanwhile, China is accelerating the piloting of its central bank digital currency, also known as the digital yuan, in local shops in Hong Kong. The use of the so-called “e-CNY” is limited to Hong Kong residents only, allowing them to load up to CNY 10,000 (about $1,380) into their digital wallets through 17 retail banks in Hong Kong, including Standard Chartered Bank, ZA Bank and DBS Bank, Crypto.news reported.