The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) have announced plans for a new regulatory framework for stablecoin issuers, following broad public support and feedback from stakeholders. On July 17, these financial institutions released conclusions on creating local stablecoin-related legislation, based on a two-month public consultation period that ended in February, which received 108 submissions from various stakeholders, including market participants, industry associations, and professional organizations.
The majority of respondents agreed that a regulatory regime is necessary for fiat-referenced stablecoin (FRS) issuers to manage potential monetary and financial stability risks while ensuring transparent and effective oversight. The proposed regulatory requirements and implementation arrangements garnered general support, along with additional suggestions.
Christopher Hui, Secretary for the FSTB, stated that the new licensing regime for FRS issuers would complement existing regulatory measures for virtual asset (VA) trading platforms. Hui noted that this would “further strengthen” the VA regulatory framework in Hong Kong, align it with international standards, and help mitigate financial stability risks associated with stablecoin issuance.
Eddie Yue, CEO of the HKMA, expressed appreciation for the feedback received and emphasized the strong support for the proposed regulatory regime. He stated, “We believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.” The FSTB and HKMA plan to incorporate this feedback into the final legislative proposal and aim to present a bill to the legislative council soon.
Additionally, the HKMA is reviewing applications for a stablecoin issuer sandbox and will soon publicize the list of participants. Hong Kong regulators have been proactive in overseeing the digital asset industry. On July 15, the Hong Kong Securities and Futures Commission updated its alert list to include seven crypto trading platforms operating without licenses and raised concerns over investor safety. In June, Hong Kong sought feedback on several critical aspects of Web3 policy development, including balancing technical, legal, and regulatory frameworks from experts worldwide.