Hong Kong Will Implement License Regime for Stablecoin Issuers

Hong Kong has put forth a legislative proposal suggesting that stablecoin issuers obtain a license in the city to regulate the industry.

In a jointly published consultation paper by the Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau, it is outlined that a stablecoin issuer referencing the value of fiat currencies in Hong Kong would need an HKMA license.

The proposed framework mandates local incorporation, a management presence, and the implementation of a stabilization mechanism, including a pool of high-quality reserve assets.

Only stablecoins from licensed issuers would be available to retail investors. The HKMA plans to introduce a “sandbox” for stablecoin issuance in Hong Kong, with details to be revealed soon.

Public feedback on the legislative proposal will be accepted until February 29, 2024.