Hong Kong’s financial regulator has announced proposals to supervise issuers through a licensing system and regulatory sandbox to convey “supervisory expectations and guidance on compliance” to prospective issuers of stablecoins.

Hong Kong’s central banks, the Hong Kong Monetary Authority (HKMA) and the Financial Services and Treasury Board (FSTB), are seeking feedback on the proposal by February 29. A fiat-referenced stablecoin is a type of crypto asset (virtual currency) designed to maintain a value comparable to currencies such as the US dollar or Hong Kong dollar.

Hong Kong is trying to position itself as a regional crypto hub. Hong Kong introduced a licensing system for crypto asset service providers in June, making retail crypto asset transactions subject to regulation. Hong Kong has long planned to regulate fiat-backed stablecoins.

The system will be introduced by enacting a law that requires publishers that meet certain conditions to obtain a license from the HKMA. Companies that wish to issue stablecoins that reference fiat currency in Hong Kong, issue stablecoins that reference the Hong Kong dollar, or sell stablecoins to general consumers in Hong Kong must obtain a license to do so. It becomes necessary.

HKMA Governor Eddie Yue said in a statement: “We support financial innovation and are committed to implementing the necessary regulations to enable the long-term, sustainable and responsible development of the crypto asset ecosystem. “We think it’s essential to have guardrails and standards in place.”

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Shutterstock
｜Original text: Hong Kong Regulators Propose Mandatory Licenses for Fiat-Backed Stablecoin Issuers