Hong Kong Regulators Propose Mandatory Licenses for Fiat-Backed Stablecoin Issuers now in 2023 end

Hong Kong financial regulators published proposals for supervising stablecoin issuers through a licensing regime and a regulatory sandbox to communicate “supervisory expectations and guidance on compliance” to prospective issuers.

The jurisdiction’s central bank, the Hong-Kong Monetary Authority (HKMA), and the Financial Services and the Treasury Bureau (FSTB) are seeking feedback by Feb. 29. Fiat-referenced stablecoins are a type of cryptocurrency designed to maintain its value on par with sovereign currencies like the U.S. or Hong Kong dollar.

Hong Kong is seeking to position itself as a regional crypto hub. It implemented a licensing regime for crypto service providers in June that recognizes retail crypto trading as a regulated activity. The jurisdiction has been planning regulations for fiat-backed stablecoins for some time.

The regime will be introduced through legislation requiring issuers who meet certain conditions to obtain a license from the HKMA. Firms looking to issue a fiat-referenced stablecoin in Hong-Kong, to issue a Hong-Kong dollar-referenced stablecoin or to market stablecoins to the Hong Kong public will need a license to operate.

“We are supportive of financial innovation and believe that it is essential to put in place the necessary regulatory guardrails and standards to enable the long-term, sustainable and responsible development of the virtual asset ecosystem,” HKMA CEO Eddie Yue said in a statement.

Original story posted on Coindesk