Hong Kong Legislative Council Debates Stablecoin Bill as Crypto Hub Ambitions Grow

Hong Kong’s Legislative Council has convened to discuss the proposed "Stablecoins Bill," marking a significant step in the region's efforts to regulate crypto as it aims to establish itself as a global crypto hub.

The bill was introduced for its first reading on Dec. 18 and focuses on the licensing and operational requirements for stablecoin issuers.

During a recent committee meeting, key government officials addressed the proposed regulations, emphasizing the need for stablecoin issuers to obtain licenses from the Hong Kong Monetary Authority (HKMA). Francis Ho, deputy secretary for Financial Services and the Treasury (FSTB), highlighted that issuers would be required to maintain a robust reserve stabilization mechanism, ensuring that reserve assets consist of high-quality and liquid assets.

In addition to the stablecoin discussions, another subcommittee convened to focus on the licensing regime for crypto trading platforms.

Joseph Chan, undersecretary of the FSTB, announced plans for the Securities and Futures Commission to establish a consultation panel to incorporate the views of crypto trading platforms in future regulatory frameworks.

Authorities are also contemplating regulations for over-the-counter crypto trading following a public consultation process initiated last year.

A second round of public consultation is expected to take place this year, with draft licensing regulations for crypto custodians also in development.

Hong Kong's proactive approach has included a crypto licensing regime for trading platforms enacted in 2023 and the launch of a sandbox for stablecoin issuers by the HKMA in March of the previous year.

Notable participants in this sandbox include Standard Chartered Bank and Animoca Brands, among others, signaling the region's commitment to fostering a robust crypto ecosystem.