Hong Kong relaxes some stablecoin rules, launches limited trials with 3 industry players

The HKMA announced the first stablecoin issuers to trial e-commerce, trade settlement and tokenised assets, with final rules to be submitted to Legco this year

Reading Time:3 minutes

The Hong Kong Monetary Authority has concluded a public consultation on its proposed stablecoin rules as it prepares a licensing regime similar to one introduced last year for traditional cryptocurrencies such as bitcoin. Photo: Shutterstock

Published: 6:14pm, 18 Jul 2024Updated: 6:19pm, 18 Jul 2024

Hong Kong regulators have decided to keep many tough requirements set out last year in a proposal for regulating stablecoins, but made some concessions following public feedback, just ahead of launching stablecoin sandbox trials in pursuit of becoming a hub for cryptocurrency business.

After concluding a consultation period for proposed stablecoin rules released in December, Hong Kong regulators plan to move forward with that regime largely intact, requiring issuers of fiat currency-backed tokens to obtain a licence from the Hong Kong Monetary Authority (HKMA), the HKMA and the Financial Services and the Treasury Bureau said in a joint statement on Wednesday.

On Thursday, the HKMA also announced the first batch of stablecoin issuers admitted into a sandbox, first announced in March, for trialling these tokens in different scenarios. Jingdong Coinlink Technology, RD InnoTech, and a joint venture from Standard Chartered Bank, Animoca Brands, and Hong Kong Telecommunications will conduct limited scale tests of stablecoins in e-commerce payments, cross-border trade settlements, and tokenised assets trading.

“The sandbox enables us to understand the business models of stablecoin issuers better, as well as to develop the regulatory framework better,” said Darryl Chan, deputy CEO of HKMA.

The sandbox trials are set to start immediately, according to the HKMA, and will be conducted with a small number of customers. Stablecoins will not be made available to the public during this period.