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Hong Kong Treasury Bureau: Will soon publish the consultation summary of the proposed regulatory regime for stablecoin issuers

Hong Kong Treasury Bureau: Will soon publish the consultation summary of the proposed regulatory regime for stablecoin issuers

CointimeCointime2024/07/15 09:10
By:Cointime

Hong Kong Financial and Treasury Bureau stated that after the virtual asset service provider licensing system came into effect in June last year, the Treasury Bureau and the Hong Kong Monetary Authority consulted the public on the proposed regulatory system for stablecoin issuers at the end of last year and will soon release a consultation summary to prepare a draft regulation for legislative council review.The Treasury Bureau pointed out that it hopes to establish an appropriate and internationally recommended regulatory system for fiat-backed stablecoin issuers, which can provide sufficient protection for fiat-backed stablecoin users and address the potential risks that fiat-backed stablecoins pose to currency and financial stability, allowing the Hong Kong virtual asset ecosystem to develop sustainably and responsibly.Given the important role of fiat-backed stablecoins in the Web3 and virtual asset ecosystems, and the increasingly close connection between the traditional financial system and the virtual asset market, the government needs to establish a regulatory system for fiat-backed stablecoin issuers, which mainly requires: reserve management and stability mechanisms, including requiring issuers to ensure that fiat-backed stablecoins are fully supported by high-quality and highly liquid reserve assets; redemption requirements; and governance, knowledge, and experience regulatory requirements.At the same time, to protect fiat-backed stablecoin users, it is suggested that only the following institutions can sell fiat-backed stablecoins in Hong Kong or actively promote related services to the Hong Kong public: licensed fiat-backed stablecoin issuers; recognized 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.

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