The Government welcomed the passage of the Stablecoins Bill by the Legislative Council on 21 May to establish a licensing regime for fiat-referenced stablecoins (FRS) issuers in Hong Kong, to further enhance Hong Kong’s regulatory framework on virtual asset (VA) activities, thereby "fostering financial stability and encouraging financial innovation."
Upon implementation of the Stablecoins Ordinance, any person who, in the course of business, 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 Hong Kong Monetary Authority.
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.