Hong Kong has handed a landmark invoice to control fiat-backed stablecoins, signaling its continued push to place itself as a worldwide hub for digital finance.
On Might 21, Hong Kong lawmaker Johnny Ng confirmed that the Legislative Council accredited the invoice after its third studying. The brand new legislation is anticipated to take impact earlier than the top of 2025.
Licensing regime
The brand new framework introduces a licensing regime for stablecoin issuers by the Hong Kong Financial Authority (HKMA). It gives a transitional interval for companies to adapt, apply for licenses, and meet regulatory expectations.
As soon as the principles are in impact, solely licensed entities shall be allowed to concern fiat-referenced stablecoins in or tied to the Hong Kong greenback, no matter their geographic location.
The transfer seeks to instill confidence, transparency, and powerful compliance requirements inside the metropolis’s rising digital asset ecosystem.
He mentioned:
“Hong Kong’s stablecoins are backed by fiat foreign money as underlying belongings, and we welcome international enterprises and establishments serious about issuing stablecoins to use in Hong Kong.”
In the meantime, Ng burdened the invoice is a place to begin for broader Web3 improvement within the area. He acknowledged that the federal government plans to work intently with private-sector gamers to design use instances and promote stablecoin adoption.
Hong Kong’s stablecoin invoice
The Hong Kong authorities mentioned the brand new framework requires any entity issuing a fiat-referenced stablecoin (FRS) tied to the Hong Kong greenback to fulfill strict operational requirements.
These embody clear asset segregation, redemption at par worth, and a dependable mechanism for sustaining value stability.
They need to additionally adjust to anti-money laundering legal guidelines, threat administration protocols, disclosure obligations, and unbiased auditing necessities. As well as, solely licensed companies can promote or promote these merchandise to the general public.
Christopher Hui, Secretary for Monetary Providers and the Treasury, mentioned the legislation adopts a risk-based regulatory mannequin that aligns with international requirements.
He added that this method will assist create a safer person atmosphere, promote long-term business progress, and strengthen Hong Kong’s repute as a number one worldwide monetary hub.
