Hong Kong is taking quick action to regulate stabilizers, indicating its potential integration into the region’s financial system. Regulators have drafted a “Stablecoins Act” that provides for tasks and restrictions on Stablecoin issuers and advertisers. The bill outlines the necessary steps to ensure consumer protection for individual protection using Stablecoins, i.e., crypto assets are pegged to retained assets, such as fiat currencies, to maintain price stability amid market volatility.
Hong Kong’s stability bill was recently submitted to the Legislative Council, marking its first reading. After this stage, the bill will be read by regulators twice more before becoming law. According to Cointelegraph’s report, each reading will involve detailed discussions, assessments and any necessary revisions.
What does this bill require?
The first draft of Hong Kong’s Stablecoin Act was published in the official communiqué earlier this month. The bill outlines stricter licensing requirements for Stablecoin issuers in the area. Violations of these licensing and approval regulations could result in a maximum fine of up to US$50,000 (approximately Rs 42.6 lakh) and a maximum sentence of two years. The Hong Kong Monetary Authority (HKMA) will supervise the approval of these permit applications.
Only licensed entities are permitted by law to promote their stable entities. As suggested by the bill, stable and stable signatures without a license can lead to penalties, including up to six months in prison. This is not only aimed at unlicensed issuers, but also at the marketing agencies that promote them.
The main purpose of the bill is to use stablecoins in daily financial transactions to protect individuals from potential losses. Regulators will carefully evaluate the issuer’s background, asset reserves and operating framework before granting the license.
A report from the Southern China Morning Post said the document aims to enable automated incentives, loyalty programs and kickbacks to citizens that are available in Hong Kong.
Revisiting Hong Kong’s crypto journey in 2024
Hong Kong, who was named the world’s most suitable country for crypto in the 2022 Global Crypto Preparation Report, has begun to disrupt unregistered cryptocurrency businesses. Hong Kong’s Securities and Futures Commission (SFC) blocked many non-compliant crypto platforms in March. Regulators also rejected all cryptocurrency businesses that have applied for an official license from June. SFC has accelerated audits of operating crypto companies to ensure compliance and determine breaches.
In April, Hong Kong approved BTC and ETH spot ETFs – allowing investors to interact with cryptocurrency assets through traditional stock markets. Hong Kong’s largest digital bank – ZA Bank – has launched a cryptocurrency trading service to individual retail merchants.
This year, Hong Kong also established a subcommittee aimed at studying encryption regulations with the aim of developing a comprehensive regulatory framework in the near future.
