Hong Kong to Enhance its Grip on Stablecoins with Regulatory Review

Hong Kong to Enhance its Grip on Stablecoins with Regulatory Review

Hong Kong's government is stepping up its efforts to regulate stablecoins, with plans to introduce a legislative framework later this year. The move is part of the government's broader Web3 and virtual asset development strategy. Joseph Chan Ho-lim, deputy secretary for the Financial Services and the Treasury, announced the plans at a Legislative Council subcommittee meeting. The government will aim to “take forward the legislative exercise on the regulatory framework for fiat-backed stablecoins within this year,” he said. The new regulations will likely include provisions for licensing stablecoin issuers, requiring them to maintain adequate reserves, and ensuring compliance with anti-money laundering and counter-terrorism financing measures. The government is also considering whether to regulate stablecoins in a similar way to traditional payment systems. The move to regulate stablecoins is part of a broader trend among governments worldwide. As the use of stablecoins continues to grow, regulators are seeking to ensure that they are used in a safe and responsible manner. Hong Kong's move to regulate stablecoins is also notable in light of its plans to become a hub for digital asset development. The government has already announced plans to establish a licensing regime for virtual asset service providers and to develop a central bank digital currency. The regulation of stablecoins is seen as an important step in creating a robust and well-functioning digital asset ecosystem in Hong Kong.