Hong Kong’s proposed system follows recommendations issued by global standard setters, but the city’s rules are “in some ways slightly stricter” than Singapore’s. For example, the minimum paid-up capital requirement is at least HK$25 million (US$3.2 million). Chengyi Ong, his head of APAC policy at Chainalies, said:
“This framework reflects the intention of the Hong Kong authorities to set a high bar for stablecoins that reference fiat currencies.” [FRS]We recognize the potential for widespread adoption,” Mr Ong said.
China calls for stricter crackdown on use of cryptocurrencies in illegal foreign exchange transactions
China calls for stricter crackdown on use of cryptocurrencies in illegal foreign exchange transactions
Rules laid out in a consultation paper released by the Hong Kong Monetary Authority (HKMA) and the Financial Services and Treasury Board (FSTB) on Wednesday will allow unlicensed companies to sell stablecoins to retail investors in Hong Kong through the regulator. That is unacceptable. You can develop channels and actively promote FRS to your city. Requirements include having reserves at least equal to the value of the issued stablecoin, being incorporated in Hong Kong, and having the chief executive officer, senior management team, and key personnel all based in Hong Kong. included.
“Under the proposed regime, it would be very difficult to be authorized as an issuer of fiat-referenced stablecoins,” said Ben Hammond, partner and office managing partner at Ashurst in Hong Kong. Told. “At this point, it is also questionable how many issuers will be able to meet the criteria for accreditation.”
The operator of USD-pegged Tether (USDT), the world’s largest stablecoin by market capitalization, ostensibly already operates in Hong Kong, where it is incorporated and has the legal personality of Tether Limited. . However, parent company Tether Holdings Limited is incorporated in the British Virgin Islands, and management with ties to the Bitfinex exchange no longer appears to be operating outside Hong Kong, and whether it will obtain a licence. The question arises. Tether did not immediately respond to a request for comment.
Boston-based Circle, which operates the world’s second-largest stablecoin USD Coin (USDC), said it “commends the Hong Kong government” for the proposed rules, which “resonate” with its own policies, and that its framework. He said he was reviewing it. Opportunity to collaborate with regulators.
Yam Ki Cheung, Vice President of Strategy, said: “We continue to work with the HKMA and FSTB to support the development of regulated stablecoins as trusted mediums of exchange and the development of sustainable and responsible virtual assets in Hong Kong. We are committed to supporting the development of the ecosystem.” said in a statement regarding the circle’s policies.
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Cryptocurrency scandal shakes Hong Kong
Cryptocurrency scandal shakes Hong Kong
Andrew Fay, a partner at King & Wood Mallesons in Hong Kong, said localization requirements “could be extremely burdensome for stablecoin issuers who currently operate on a global scale.” Stated.
“Given the significant financial resources and compliance costs associated with establishing a locally incorporated licensed entity in Hong Kong, some global issuers may be deterred from offering FRS to the general public in Hong Kong. ” said Fay.
“There is a trade-off between easier market access and greater protection for retail investors, and policymakers need to strike a careful balance,” Fay said.
The physical presence requirement may also have some benefits. For example, there could be “room for locally-issued stablecoins to emerge and gain market share,” Chainalysis’ Ong said.
Hong Kong regulator proposes permission for public sale of stablecoins
Hong Kong regulator proposes permission for public sale of stablecoins
Patricia Ho, general counsel at blockchain company Scroll, said there would also be fewer opportunities for companies to take advantage of different rules in different markets.
“The gray area that publishers and platforms can operate in is narrowing, and will become increasingly so over the next year or two,” she said. “There will be much more cooperation between regulators and cross-border information exchange in the future, which will reduce the room for regulatory arbitrage.”
“International crypto asset trading has been developing for many years, and there are already several stablecoins in circulation on the market,” Ng wrote. “If an international stablecoin company fails to apply” [for a licence] Once trading begins in Hong Kong within the specified period, relevant regulators will decide how such global stablecoins will operate on licensed exchanges in Hong Kong in order to achieve international consistency. It is necessary to consider whether it will be traded in the future. ”
The proposal would require stablecoin issuers to apply for a license within three months of the regulation taking effect, but no timeline has been set at this time.
Ho said there are several areas where the industry is expected to seek changes, particularly the requirement to hold reserves only in the base currency and a ban on interest payments.
“This is one aspect where the real world and the regulated world have not really converged, because in the real world, especially at this point in the crypto market cycle, investors and consumers ” she said, citing a bull market amid expected price increases for tokens such as Bitcoin and Ether.
Although the Hong Kong government still aims to become a virtual asset hub, its “strictly defined and restrictive” rules indicate that the Hong Kong government is “not keen on doing so.” [pursue growth] No matter what,” said Ashurst’s Hammond.
“In this case, concerns about monetary policy and financial stability and, perhaps unsurprisingly, a cautious approach to consumer protection appear to be driving policy choices,” he said.
Additional reporting by Matt Haldane
