Hong Kong financial regulators published proposals for supervising stablecoin issuers through a licensing regime and a regulatory sandbox to communicate "supervisory expectations and guidance on compliance" to prospective issuers.
The jurisdiction's central bank, the Hong Kong Monetary Authority (HKMA), and the Financial Services and the Treasury Bureau (FSTB) are seeking feedback by Feb. 29. Fiat-referenced stablecoins are a type of cryptocurrency designed to maintain its value on par with sovereign currencies like the U.S. or Hong Kong dollar.
Hong Kong is seeking to position itself as a regional crypto hub. It implemented a licensing regime for crypto service providers in June that recognizes retail crypto trading as a regulated activity. The jurisdiction has been planning regulations for fiat-backed stablecoins for some time.
The regime will be introduced through legislation requiring issuers who meet certain conditions to obtain a license from the HKMA. Firms looking to issue a fiat-referenced stablecoin in Hong Kong, to issue a Hong Kong dollar-referenced stablecoin or to market stablecoins to the Hong Kong public will need a license to operate.
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"We are supportive of financial innovation and believe that it is essential to put in place the necessary regulatory guardrails and standards to enable the long-term, sustainable and responsible development of the virtual asset ecosystem," HKMA CEO Eddie Yue said in a statement.
