The Government of Hong Kong welcomed the passage of the Stablecoins Bill by the Legislative Council today to establish a licensing regime for fiat-referenced stablecoins (FRS) issuers in Hong Kong.
Upon implementation of the Stablecoins Ordinance, any person who issues an FRS in Hong Kong, or issues an FRS that purports to maintain a stable value with reference to Hong Kong dollars in or outside Hong Kong will need to obtain a licence from the Monetary Authority (MA).
The relevant persons must satisfy the requirements in areas such as reserve asset management and redemption, including proper segregation of client assets, maintaining a robust stabilisation mechanism, and processing stablecoin holders’ requests for redemption at par value with reasonable conditions.
The relevant persons must also comply with a range of requirements, including those on anti-money laundering and counter-terrorist financing, risk management, disclosure and auditing, and fitness and propriety.
The MA will conduct further consultations on the detailed regulatory requirements of the regime in due course.
The regulatory regime is set to provide better protection for the general public and investors. Among others, under the Ordinance, only specified licensed institutions may offer an FRS in Hong Kong, and only an FRS issued by a licensed issuer may be offered to a retail investor.
Additionally, to prevent fraud and scams, at all times (including the six-month non-contravention period), only advertisements of licensed FRS issuance are allowed. Members of the public are advised to take note of the above and exercise care when receiving FRS-related advertising materials or messages.
The Ordinance is expected to come into effect this year, to allow sufficient time for the industry to understand the requirements under the licensing regime. The regime also provides for a transitional arrangement to facilitate the industry in applying for a licence and making suitable business arrangements in accordance with the regulatory regime.
The Government will continue to support the development of the virtual assets (VA) sector. Following the implementation of the VA trading platform and stablecoins issuers regulatory regimes, the Government will soon launch consultations on VA over-the-counter and custodian services, and promulgate the second policy statement on the development of VAs.
