Hong Kong Passes Law to Regulate Fiat-Pegged Stablecoins

Hong Kong adopted legislation on Wednesday to make a license regime for Stablecoins with FIAT references, so that the aim was to become a digital assets hub and at the same time respond to concern about the protection of investors and financial stability.

The new law, passed According to the legislative Council of the city, FRS emission requires to obtain a license from the Hong Kong Monetary Authority (HKMA).

Licenseeers must meet a series of requirements for the management of reserve assets, repayment of nominal value, segregation of customer funds, anti-money laundering practices, disclosure and fitness and decent standards.

“The regulation adheres to the ‘the same activity, the same risks, the same regulation’ principle, with a focus on a risk-based approach to promote a robust regulatory environment,” said Christopher Hui, secretary for financial services and the treasury, in a rack.

“This is not only in accordance with the international legal requirements, but also lays a solid foundation for Hong Kong’s virtual asset market,” he added.

Embrace crypto

The law is part of Hong Kong’s efforts to rehabilitate his crypto reputation and to encourage the growth of the industry after the collapse From fraudulent exchange JPEX in 2023.

Just as Hong Kong prevents Crypto from embracing after years of hesitation, the authorities are now trying to find a difficult balance between encouraging innovation in digital assets, while retail investors are protected against abuse.

According to the new regime, only licensed institutions can publish a FRS in Hong Kong, and only licensed offers can be marketed to retail investors.

Non-authorized advertisements will be prohibited, even during the six-month travel period before enforcement begins. The HKMA will discuss further about detailed requirements.

The Stablecoins market in Hong Kong remains modest compared to global volumes.

“The new account gives Empenten something tangible: clarity about licenses, redemption obligations, reserve requirements and a framework that is friendly to traditional finances,” said Justin d’Anthan, head of the sale at Token Advisory Firm Liquifi, said Decrypt. “But let’s be candid, Hong Kong remains a smaller junction in the global Stablecoin activity.”

Tether remains the preferred crryptocurrency in the many OTC trading stores in Hong Kong. At the same time, the US dollars supported assets in the American markets remain the leading force in the Stablecoin sector worldwide.

Hong Kong’s legislation comes when the US Senate promotes its own Stablecoin Bill. The brilliant law, which recently tidy An important procedural vote, would create a national legal framework for publishing stablecoins in the US. The law still has to pass the house before he reaches President Trump, who is expected to sign it in the law.

“For a while, Hong Kong, Singapore and to a certain extent Dubai held the crown when it came to progressive crypto policy. But the script turned over the last six months,” said d’Anethan. “The US, long seen as opponents, became the unexpected epicenter of Pro-Crypto Regulatory Momentum.”

The Stablecoin regulation of Hong Kong is expected to come into effect later this year, with transitional provisions to help emission to adapt to the new regime.

Edited by Sebastian Sinclair