Hong Kong Monetary Authority (HKMA) and Financial Services and the Treasury Bureau have released a public consultation paper to gather residents’ opinions on the proposed regulatory regime for stablecoin issuers. The HKMA also announced the introduction of a sandbox arrangement whose purpose will be to convey supervisory expectations and guidance on compliance to prospective stablecoin issuers.
HKMA’s Sandbox Arrangement
On Dec. 27, the Hong Kong Monetary Authority (HKMA) and Financial Services and the Treasury Bureau (FSTB) released a public consultation paper to gather residents’ opinions on the proposed regulatory regime for stablecoin issuers. The consultation period began on the day of the announcement and will end on Feb. 29, 2024, the two bodies said in a joint statement.
In addition to releasing the consultation paper, the HKMA announced that it will introduce a sandbox arrangement whose purpose will be to convey supervisory expectations and guidance on compliance to prospective stablecoin issuers. The sandbox arrangement will also enable the regulator to get prospective stablecoin issuers’ perspectives on the proposed regulatory requirements.
Commenting on the two developments, Christopher Hui, the Secretary for Financial Services and the Treasury, said:
With the implementation of the licensing regime for VA [virtual assets] trading platforms from June this year, the legislative proposal to regulate FRS [fiat-referenced stablecoin] is another important measure facilitating Web3 ecosystem development in Hong Kong.
Hui added that by having the necessary licensing and enforcement parameters, Hong Kong will be able to oversee stablecoin issuers in line with international standards.
Eddie Yue, the CEO of HKMA, while his organization is supportive of innovation, it is still required to put in place “guardrails and standards to enable the long-term, sustainable, and responsible development of the virtual asset ecosystem.”
Yue added that the public consultation process, as well as the sandbox arrangement, show that the HKMA is on course to achieve this goal. The joint statement said the consultation paper can be found on the websites of both the FSTB and the HKMA.
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