Hong Kong’s Stablecoins Ordinance came into effect on August 1, a regulation the Hong Kong Monetary Authority (HKMA) released to establish a licensing system for stablecoin issuers.
Stablecoins are a kind of digital encrypted currency whose value is pegged to other assets like fiat currencies and keeps relatively stable.
Hong Kong’s Stablecoins Ordinance states that all issuers of fiat-backed stablecoins operating in Hong Kong and the issuers of stablecoins pegged to the Hong Kong dollar must obtain a license from the HKMA and meet the required standards of reserve, redemption and risk management like anti-money laundering.
HKMA chief executive Eddie Yue said that it is necessary to regulate the stablecoin market as they are becoming an emerging payment instrument and gradually integrating into the mainstream financial system, the Xinhua News Agency reported.
Yue believes that although the regulation will inevitably limit the room for stablecoin businesses to scale rapidly in the short term, it is good for long-term development of the sector, which is still in its infancy.
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