The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) jointly released the Consultation Conclusions - Legislative Proposals for Implementing a Regulatory Regime for Stablecoin Issuers in Hong Kong on the 17th. In the consultation summary, the FSTB and the HKMA adopted two suggestions made by CertiK, a leading Web3.0 security audit company. In addition, several suggestions made by institutions such as Ant Group, Binance, KPMG and Standard Chartered Bank were also adopted.
CertiK’s adopted recommendations include:
Recommendation 1.13: From the perspective of risk management and user protection, we understand the importance of storing private keys and providing wallet services in different usage scenarios. The government and financial regulators are exploring the regulatory model for these activities and will maintain contact with the public and relevant stakeholders in the process.
Recommendation 3.2.42: Incident management should include, but not be limited to, the development of incident management policies, monitoring mechanisms and incident response plans to enable issuers to initiate recovery actions and report incidents to the Monetary Authority in a timely manner.
On December 27, 2023, the Treasury and the HKMA jointly published a consultation paper on the proposed regulatory regime for stablecoin issuers in Hong Kong. The consultation period ended on February 29, 2024, and a total of 108 submissions were received. Most respondents supported that a good regulatory environment is a prerequisite for the sustainable development of Hong Kongs stablecoin ecosystem.
Secretary for Finance and the Treasury, Mr Hui Ching-yu, said: “In addition to the existing regulatory regime for virtual asset trading platforms, the establishment of a licensing regime for fiat-currency stablecoin issuers will strengthen Hong Kong’s regulatory framework for virtual assets, align it with international standards, and effectively mitigate the risks to financial stability posed by activities related to the issuance of fiat-currency stablecoins.”
HKMA Chief Executive Eddie Yue said: “We sincerely thank the respondents for their valuable comments and are encouraged by their general support for the proposed regulatory regime. We believe that a good regulatory environment will help promote the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”
Professor Ronghui Gu, member of the Hong Kong Web3.0 Development Task Force and co-founder of CertiK, said: “CertiK is honored to participate in the formulation of Hong Kong’s stablecoin regulatory framework and provide input on its improvement. CertiK looks forward to continuing to work with the HKMA and other industry partners to jointly promote the security and innovation of stablecoins and related virtual assets. We believe that the implementation of these regulatory measures will not only enhance Hong Kong’s competitiveness as an international financial center, but also promote the sustainable development of the stablecoin ecosystem and bring more secure and reliable digital asset services to users.”
The Treasury and the HKMA will refer to the views and suggestions of the respondents to finalise the legislative proposals to implement the regulatory regime and will submit a draft bill to the Legislative Council as soon as possible. Click here to view the full text of the Consultation Conclusions .
