📣 Hong Kong Gears Up for Stablecoin Legislation
posted 17 Jul 2024
In a span of two months, the Hong Kong Monetary Authority (HKMA) collected 108 responses from industry players and financial institutions about regulations for fiat-referenced stablecoins. Government officials see these assets as the most promising, which is why the new bill will focus on them.
The HKMA reported that most respondents agreed on the necessity of introducing regulations for fiat-referenced stablecoins.
For the mandatory licenses, the HKMA will consider the issuer's registration address, the services provided to Hong Kong residents, and the existence of a local bank account. Applicants will need to maintain a local presence, either through an office or a subsidiary.
Issuers will also be obliged to maintain a whitepaper that includes descriptions of the technologies used, redemption mechanisms, reserve structure, and other important elements.
According to the HKMA, all fiat stablecoins must be fully collateralized, as insufficient reserves can jeopardize the project's ecosystem. Issuers will typically be required to redeem tokens within one business day of a request. There will also be certain requirements for annual risk and security audits.
Officials are presently evaluating applications for the regulatory sandbox. They assure that the legislation proposal will be finalized as quickly as possible.
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