Hong Kong is progressing towards the development of stablecoin regulations, with the final guidelines expected to be unveiled by 2024, as per disclosures by legislator Duncan Chiu. Over the past two years, Hong Kong has been diligently crafting regulations for stablecoins, with the Hong Kong Monetary Authority (HKMA) initially releasing a discussion paper in the preceding year, followed by its final recommendations in January 2023, which advocated for an agile and risk-based approach.
June of this year saw the central bank inviting public feedback on the proposed regulations, with a commitment to finalize the framework by the end of the subsequent year. The government is presently conducting consultations regarding the regulations, and the objective is to announce the regulatory framework for stablecoins by mid-2024. This development will enable stablecoin participants to issue stablecoins within Hong Kong.
Chiu, who also chairs the industry lobby group Hong Kong Information Technology Joint Council, expressed his belief that stablecoins have the potential to drive innovation in Hong Kong. He underscored that by regulating the sector, Hong Kong could establish itself as a global leader in Web3 and stimulate the growth of financial products and services anchored in stablecoins.
Hong Kong to Finalize Stablecoin Regulations and Boost Digital Asset Innovation
Chiu also discussed tokenization and the possibility of introducing a digital Hong Kong dollar. He called on the government to take the initiative in tokenizing assets like land and other resources, enabling retail investors to partake in Hong Kong’s development. Furthermore, with central bank digital currencies (CBDCs), Chiu encouraged residents of Hong Kong to adopt the upcoming digital dollar in substantial numbers.
Despite recent setbacks, such as the collapse of significant global crypto entities like FTX, and local firms like JPEX, Hong Kong has remained resolute in its commitment to embracing digital assets and blockchain technology. The Securities and Futures Commission of Hong Kong has also taken steps to safeguard investors by announcing its intention to publicly disclose all Virtual Asset Service Providers (VASPs) that have obtained or applied for retail trading licenses. This measure is aimed at aiding the public in the identification of suspicious VASPs.