The Guidance Notes are being issued to inform industry stakeholders about the FSC’s regulatory policy on stablecoins following the enactment of the Virtual Asset and Initial Token Offerings Services Act.

Deadline for comments is 11 August 2023.

The FSC Rules that have come into effect are:

(i) Virtual Asset and Initial Token Offerings Services (Capital and Other Financial Requirements) Rules 2022;

(ii) Virtual Asset and Initial Token Offerings Services (Client Disclosure) Rulesm2022;

(iii) Virtual Asset and Initial Token Offerings Services (Custody of Client Assets) Rules 2022;

(iv) Virtual Asset and Initial Token Offerings Services (Cybersecurity) Rules 2022;

(v) Virtual Asset and Initial Token Offerings Services (Publication of Advertisements) Rules 2022;

(vi) Virtual Asset and Initial Token Offerings Services (Risk Management) Rules 2022; and

(vii) Virtual Asset and Initial Token Offerings Services (Statutory Returns) Rules 2022.

The Act sets out a comprehensive legislative framework to regulate the business activities of virtual assets service providers and initial token offerings. It has been developed, inter alia, in accordance with international standards established by the Financial Action Task Force to manage, mitigate and prevent anti-money laundering and countering the financing of terrorism risks associated with these emerging and innovative business activities.

The Bill makes provisions for:

• the licensing, supervision and monitoring of virtual asset service providers;
• the registration procedures and requirements for the issuance of initial token offerings;
• the technical requirements, governance structures, risk management and information disclosure issues for virtual asset service providers;
• the protection of the interests of clients of virtual asset service providers;
• compliance with international standards of the Financial Action Task Force on anti-money laundering and combatting the financing of terrorism and activities related to the proliferation of weapons of mass destruction.

Deadline for comments is 23 July 2021.