Hong Kong begins discussions to introduce stablecoin regulatory framework


Hong Kong’s central banking establishment, the Hong Kong Monetary Authority (HKMA), launched a questionnaire to gauge public opinion on rules for crypto-assets and stablecoins. The state-backed regulator intends to determine a regulatory framework by 2023-24.

HKMA’s “Discussion Paper on Crypto-assets and Stablecoins” highlights the explosive progress of the stablecoin market when it comes to market capitalization since 2020 and the concurrent regulatory suggestions put forth by worldwide regulators together with the United States’ Financial Action Task Force (FATF), the Financial Stability Board (FSB) and The Basel Committee on Banking Supervision (BCBS).

Market Capitalization of Crypto-assets. Source: HKMA

According to the HKMA, the present measurement and buying and selling exercise of crypto-assets might not pose a right away menace to the soundness of the worldwide monetary system from a systemic viewpoint. However, the dialogue paper warned:

“The growing exposure of institutional investors to such assets as an alternative to or to complement traditional asset classes for trading, lending and borrowing […] indicate growing interconnectedness with the mainstream financial system.”

Market Capitalization of Major Stablecoins. Source: HKMA.

Based on the above determine, HKMA’s paper reveals that the worldwide market capitalization stood at about $150 billion in December 2021, “representing about 5% of the overall crypto-asset market.” The regulator has additionally shared an inventory of eight questions to hunt policy-related suggestions citing 5 attainable regulatory outcomes — no motion, opt-in regime, risk-based regime, catch-all regime and blanket ban:

Possible coverage choices for regulating crypto-assets. Source: HKMA.

HKMA expects stakeholders to submit their responses by thirty first March 2022, and goals “to introduce the new regime no later than 2023/24.”

Major jurisdictions’ regulatory stance in the direction of stablecoins. Source: HKMA.

On an finish word, the regulator said that payment-related stablecoins have the next potential for being included into the mainstream monetary system and even day-to-day industrial and financial actions. 

As a consequence, the HKMA considers increasing the scope of the Payment Systems and Stored Value Facilities Ordinance (PSSVFO), a legislation that determines the legality of monetary merchandise. 

Related: Hong Kong actual property big leads $90M increase for crypto financial institution Sygnum

Complementing the native authorities’s pro-crypto intentions, one in all Hong Kong’s largest property builders Sun Hung Kai invested $90 million in Sygnum, a Swiss financial institution devoted to digital asset holding.

As Cointelegraph reported, the Series B funding spherical brings Sygnum’s post-money valuation to $800 million, marking a tenfold surge in consolidated revenues from 2021.

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