In December 2024, the Hong Kong government submitted a proposed stablecoin bill to the Legislative Council as it seeks to better police the $220 billion industry. Legislators recently convened to discuss the bill for the first time, with some key officials from the government invited to share their views on the future of stablecoins in the city-state.
The dedicated LegCo stablecoin committee invited Francis Ho and Tanna Chong, deputy secretaries for financial services at the Treasury, to offer their views on stablecoin regulations. Daryl Ho and Ernest Ho, executive directors at the Hong Kong Monetary Authority (HKMA), also attended the session alongside officials from the Department of Justice (DoJ).
The bill assigns jurisdiction over stablecoins and their issuers to the HKMA, the city’s de facto central bank. Issuers must obtain a license from the watchdog, with some of the requirements being a paid-up share capital of $3.2 million and a segregated pool of reserve assets, which must be of “high quality and high liquidity with minimal investment risk.”
During the committee sitting, Treasury’s Ho Siu-hong doubled down on the need for stablecoin issuers to obtain a license, reports one local outlet. The city’s regulators, led by the HKMA, would, in turn, strive to ensure that the value of the reserve assets is “at least equal to the face value of the circulating legal currency stablecoins at any time, and must be properly separated and kept.”
One of the standout features of Hong Kong’s ‘crypto’ regulatory framework has been the city’s consultation with industry stakeholders, and the stablecoin framework was no different. HKMA CEO Eddie Yue stated in December that the central bank had “extensively consulted” virtual asset service providers (VASPs); in a separate LegCo subcommittee discussing digital assets last week, Treasury’s Joseph Chan reiterated this approach, stating that the securities watchdog would set up a new panel for VASPs “to ensure their views and needs are fully considered.”
Hong Kong is one of many jurisdictions rushing to regulate stablecoins as the sector’s prominence surges globally. Taiwan’s Financial Supervisory Commission (FSC) recently proposed allowing the state’s commercial banks to issue and manage stablecoins. The framework would require global issuers, such as Tether and Circle, to obtain local authorization for their stablecoins, a requirement similar to the European Union’s under Markets in Crypto-Assets (MiCA) regulation, which Tether has struggled to comply with.
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