Safeguards crucial as Hong Kong seeks slice of cryptocurrency pie
- It is important to strike a balance between protecting investors’ interests and making a favourable regulatory environment for coin issuers
Hong Kong is competing with financial centres around the world to establish itself as a hub for cryptocurrency business.
To achieve this requires allowing multiple forms of cryptocurrency tools as well as the appropriate regulatory framework to help manage the risk of monetary and financial instability.
To that end, a regulatory regime for stablecoins has taken a welcome step closer to fruition after a two-month consultation wrapped up last month.
The Hong Kong Monetary Authority and Financial Services and the Treasury Bureau have prudently chosen to keep in place most of the rules they initially proposed in December to manage stablecoins, virtual assets that are pegged to other assets such as a fiat currency to maintain a stable value.
Issuers will be required to obtain a licence from the HKMA. The rules also require that stablecoins be fully backed by reserve assets “at any given point in time”, and that issuers publish monthly confirmation of those assets from an independent auditor.
