Hong Kong Propels Stablecoin And Cryptocurrency Trading Regulations Forward – CryptoInfoNet

The Hong Kong authorities have released a consultation document to elicit the community’s perspective on a proposed legislative measure targeting the regulation of stablecoin providers. In parallel, the Financial Services and the Treasury Bureau (FSTB) has begun soliciting public input early this month on a regulatory scheme for licensing OTC cryptocurrency trading platforms.

Christopher Hui, tasked as the Secretary for Financial Services and the Treasury, conveyed plans for crafting and tabling legislation tailored to stablecoin and OTC crypto trading regulation, hinging on insights obtained from the aforementioned consultations.

The public’s feedback on regulating OTC cryptocurrency trading services will continue to be accepted until April 12, with the stablecoin regulation consultation concluding previously on February 29. The discussions have advocated that all stablecoin entities pegged to traditional currencies must secure authorization from the Hong Kong Monetary Authority (HKMA).

Hui particularly emphasized the uptick in crypto-related malfeasance, referencing an observed surge in such occurrences in recent times. Reportedly, Hong Kong experienced 3,415 instances of cryptocurrency-linked crime last year, marking a stark increase, with the financial stakes involved reaching nearly HK$4.4 billion (around $562.6 million).

Many significant figures in the finance world are tuning into Hong Kong’s drive to bring into force stablecoin regulatory measures as early as this quarter. Notably, Harvest Fund Management Co.’s international division is among the interested parties.

The city’s regulatory steps encompass introducing a managed system for stablecoin issuers by instituting a licensing protocol. These actions resonate with lawmakers’ calls for enhanced regulatory oversight to close the gaps that currently enable unlicensed entities to operate without regulation. The regulatory body has specified that only stablecoins released by approved institutions may be accessible to individual investors.

Per the draft regulation, any party offering a stablecoin tied to fiat money in Hong Kong must be an established local corporation, maintain a managerial presence within the city, and implement a credible transaction settlement system. Such a system would necessitate maintaining an adequately sized reserve of liquid, high-quality assets along with securing proper custodial services.