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Hong Kong vows to regulate stablecoins, explore rules for virtual asset derivatives to protect investors
- The city aims to introduce a licensing regime for stablecoins by 2024, officials say at the China Conference: Hong Kong forum
- Hong Kong will continue to create a holistic and predictable regulatory environment, city financial chief Christopher Hui says
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Hong Kong officials said they are committed to introducing regulations for stablecoins by 2024 while reviewing rules on crypto derivatives, as the city strives to bolster its virtual asset licensing regime and become a global Web3 hub.
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Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, said at the South China Morning Post’s China Conference: Hong Kong 2023 that the city will continue to seek a holistic and predictable regulatory approach towards digital assets by following the principle of “similar risk, similar regulation”, which describes the need for rules to regulate the crypto space similar to financial markets.
Hong Kong earlier this month launched its retail trading rules and licensing guidelines for cryptocurrencies, which represent one of the world’s most exacting regulatory frameworks for centralised crypto exchanges.
The crypto industry has widely supported the new regime, and some industry leaders have called for regulators to accelerate moves to widen the scope of legitimate virtual asset activities to include derivatives and stablecoins, which are cryptocurrencies pegged to another asset, usually fiat currency.
The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, in January announced plans to implement a mandatory licensing regime for activities related to stablecoins, saying it will require platforms to hold fully backed reserves for the tokens.
Hui said regulators are working on the regime, which is expected to be implemented next year. “What we have done and will continue to do, is put together a sustainable regulatory framework in such a way that we can grow this market, yet at the same time ensure the relevant risks are being managed,” he said.
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