Hong Kong's legislature passed a stablecoin bill on Wednesday that establishes a licensing regime for fiat-referenced stablecoin issuers in Hong Kong, providing regulatory clarity for upcoming stablecoin issuers.
Under the new regime, any person who issues stablecoins in Hong Kong - or issues stablecoins backed by Hong Kong dollars, whether within or outside the city - must obtain a licence from the Hong Kong Monetary Authority (HKMA), according to a government press release.
The bill also sets out requirements in areas such as reserve asset management, redemption, and risk management, aiming to protect the general public and investors.
Hong Kong has been stepping up efforts to introduce a regulatory regime to develop its own stablecoin, thereby enhancing the city's competitiveness as a global digital asset hub.
Stablecoins, a type of cryptocurrency designed to maintain a constant value, usually pegged to a fiat currency such as U.S. dollar, are commonly used by crypto traders to move funds between tokens.
“The Ordinance adheres to the 'same activity, same risks, same regulation' principle, with a focus on a risk-based approach to promote a robust regulatory environment," said Christopher Hui, the city's secretary for financial services and the treasury.
This lays a solid foundation for Hong Kong's virtual asset market, he added.
Three participants have joined a stablecoin issuer sandbox project launched by HKMA last year.
The ordinance is expected to come into effect within this year.
