Hong Kong Lawmakers Approve Bill to Regulate Stablecoins

Hong Kong joins global regulatory divide with middle-path approach

Hong Kong lawmakers have approved a bill to regulate stablecoins, a type of cryptocurrency linked to reserve assets like fiat currencies, according to a report by the South China Morning Post.

The legislation, passed by the Legislative Council on May 21 and set to take effect later in the year, requires issuers to obtain a license from the Hong Kong Monetary Authority (HKMA) before selling or promoting stablecoins.

HKMA chief Eddie Yue Wai-man said the regulatory framework aims to be risk-based, pragmatic, and flexible, focusing on public protection. The HKMA will hold further consultations on key aspects such as reserve requirements, segregation of client assets, risk management, and disclosure practices.

The new regulations come amid a global push to oversee the burgeoning crypto industry. The European Union is implementing its own set of rules, while the United States is taking a different approach with a focus on encouraging innovation alongside consumer protection.

Hong Kong’s approach appears to strike a middle ground, placing it in a unique position to attract issuers from various parts of the world.

As the world’s leading financial hub in the 1960s and 1970s, Hong Kong was a hub for foreign exchange transactions, later pivoting to become a key offshore RMB center following the 1997 financial crisis.

Now, as the cryptocurrency industry booms, Hong Kong is positioning itself once again to play a central role in this evolving financial landscape.