Stablecoin sandbox launches in Hong Kong, as companies make plans for cryptocurrencies pegged to local currency
- The Hong Kong Monetary Authority launched a plan to trial stablecoins, announced in December, for companies with a ‘genuine interest’ in fiat-backed crypto
- Former central banker Norman Chan’s RD Technologies said it is exploring the launch of a token pegged to the Hong Kong dollar
Hong Kong’s de facto central bank has announced the launch of a stablecoin “sandbox”, allowing companies to trial cryptocurrency tokens pegged to fiat currency in the city, the Hong Kong Monetary Authority (HKMA) announced on Tuesday.
The purpose of the sandbox is to allow for stablecoin trials “within a limited scope and risk-controlled environment”, according to the HKMA, and it will allow the bank to “communicate supervisory expectations and guidance” to potential issuers. There is no limit on the number of entities that can participate, but applicants must show a “genuine interest in and reasonable plan on issuing fiat-referenced stablecoins”. Applicants must also have a plan for participating in the sandbox and show “a reasonable prospect of complying” with the regulations proposed in December, which are still under review following public feedback.
“The sandbox arrangement … will facilitate the formulation of fit-for-purpose and risk-based regulatory requirements, which is key to promoting the sustainable and responsible development of the stablecoin issuance business,” HKMA Chief Executive Eddie Yue said in a statement.
The announcement was quick to attract attention from the industry. Fintech firm RD Technologies, founded by Hong Kong’s former central banker Norman Chan Tak-lam, said that it welcomed the scheme and is exploring the launch of a token called HKDR that is pegged to the Hong Kong dollar. This would “facilitate virtual asset trading and tokenised real-world asset settlements, enhance the cost-efficiency of cross-border payments, and enable the access to various on-chain financial services”, the company said.