Hong Kong begins discussions to establish a stablecoin regulatory framework

The Hong Kong Monetary Authority shared eight questions to solicit policy-related recommendations. It cited five possible regulatory outcomes: no action, opt in regime, risk-based regim, catch-all system, blanket ban, and risk-based regim.
The state-backed regulator in Hong Kong, the Hong Kong Monetary Authority, released a questionnaire to gauge public opinions on regulations for stablecoins and crypto-assets. The state-backed regulator plans to establish a regulatory framework for crypto-assets by 2023-24. The “Discussion Paper on Cryptoassets and Stablecoins” by the Hong Kong Monetary Authority (HKMA) highlights the explosive growth in stablecoin markets since 2020. It also highlights concurrent regulatory recommendations made by international regulators such as the Financial Stability Board, the United States’ Financial Action Task Force and The Basel Committee on Banking Supervision. Source: HKMAAccording the HKMA, the current market size and trading activity for crypto-assets may not pose a threat to the stability global financial system’s systemic view. Source: HKMA. Source: HKMA. Source: HKMA.HKMA expects stakeholders submit their responses by 31 March 2022 and aims to “introduce the new regime no later then 2023/24.” Major jurisdictions’ regulatory stance toward stablecoins. Source: HKMA. The regulator concluded that stablecoins related to payment have a greater chance of being incorporated into the mainstream financial systems or day-to-day economic and commercial activities. The HKMA is considering expanding the scope of Payment Systems and Stolen Value Facilities Ordinance (PSSVFO), a law that regulates the legality financial products. Related: A $90M raise by the HKMA for Sygnum crypto bank. Sun Hung Kai, one of Hong Kong’s most prominent property developers, invested $90 million into Sygnum, a Swiss bank that specializes in digital asset holding. Cointelegraph reported that Sygnum’s post money valuation has risen to $800million with the Series B financing round. This represents a tenfold increase in consolidated revenues starting in 2021.

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