The Hong Kong government has published a ‘stablecoin bill’ in the Gazette on December 6 to introduce a regulatory system for fiat currency stablecoin issuers in Hong Kong. This bill will be submitted to the Legislative Council for its first reading on December 18.
The drafted bill intends to enhance the regulatory framework for crypto activities to tackle potential risks that come with fiat currency stablecoins. The bill also aims to promote financial stability, ensure that users have sufficient protection, and leverage the benefits that “virtual assets” and related technologies can introduce.
According to local media reports, licensing system mentioned in the bill proposes that any person/entity who conducts any of the following activities is required to first have a license issued from the Monetary Authority:
(i) in the course of business, issue fiat currency stablecoins in Hong Kong;
(ii) in the course of business, issue claimed anchors or
(iii) actively promote the issuance of its legal currency stable currency to the Hong Kong public.
Additionally, the bill seeks to empower the Monetary Authority with the necessary supervisory, investigative and enforcement rights for establishing an effective regulatory system.
Commenting on the gazette bill, the Secretary for Financial Services and the Treasury Hui, Ching-yu said: “This legislative proposal is crucial to fulfilling Hong Kong’s obligations as a member of the Financial Stability Board. Adhering to the principle of ‘same activities, same risks, same supervision’, the legislative proposal focuses on risk-based. We are committed to creating a sound regulatory environment and are consistent with Hong Kong’s regulatory approach to virtual assets.”
Meanwhile, Yu Weiman, President of the Monetary Authority, claimed that the regulatory bodies believe in sound policies that can foster the sustainability of a responsible stablecoin ecosystem in Hong Kong. Weiman added that the proposals have been determined after thorough consultation, and the opinions of the industry have been fully mediated when deciding the details of the regulatory system.
Creating a stablecoin regulatory framework is Hong Kong’s latest attempt to cultivate a crypto-friendly environment with the potential to rival other Asian countries, such as Singapore. In fact, the Hong Kong government had recently announced plans to exempt hedge funds, private equity firms, and family offices from capital gains taxes on digital assets, including Bitcoin and other cryptocurrencies, with the same intention.
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