he Hong Kong Monetary Authority stated today (31) that it intends to develop a flexible, risk-based regulatory system for stablecoins, and expects to implement regulatory arrangements in 2023 or 2024.
The Hong Kong Monetary Authority earlier released the consultation conclusion of the discussion paper on encrypted assets and stablecoins , recommending that stablecoin-related activities be brought into regulation to ensure the stability of the monetary and financial systems while protecting investors.
Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, said:
An appropriate regulatory environment will help address the financial stability risks that stablecoins may pose and promote orderly and sustainable development of the industry. When finalizing specific regulatory arrangements, we will take into account the opinions collected, the latest developments in the market and international discussions, and maintain communication with stakeholders and market participants.
The Hong Kong Monetary Authority stated that it has received a total of 58 responses to the discussion paper on encrypted assets and stablecoins, from the industry, public institutions, commercial and professional groups, and individuals. Overall, respondents support a risk-based and flexible approach to the regulation of stablecoins. In addition, the respondents also generally support that the latest developments in the market and the discussions of international regulatory organizations should be considered when constructing the relevant regulatory regime.
Next, the Hong Kong Monetary Authority will focus on “whether to introduce new legislation or amend existing laws to implement the proposed regulatory regime”, “how to minimize regulatory overlap”, “address the potential problems arising from the provision of multiple or bundled financial services by affiliated entities risk” and “registration requirements” and other aspects are assessed.
The Hong Kong Monetary Authority stated that more detailed consultations will be conducted in the future with a view to finalizing the scope covered by the draft legislation, and will announce detailed information on the regulatory system in due course.