Hong Kong official plots rules for stablecoins, crypto OTC services

The government is already mulling public commentary on the proposals

article-image

Lewis Tse/Shutterstock modified by Blockworks

share

Hong Kong Financial Services Secretary Christopher Hui reiterated that lawmakers intend to propose legislation on stablecoins and virtual asset over-the-counter (OTC) services. 

Hui said that, as part of proposed legislation on OTC services, “virtual asset services providers may be required to be licensed by the Commissioner of Customs and Excise (CCE).”

The proposals would cover all OTC services “irrespective of whether the services are provided through a physical outlet and/or other platforms; providing powers for CCE to supervise the [anti-money laundering] conduct of licensees, and enforce the statutory and regulatory requirements under the new regime; and providing transitional arrangement to facilitate the effective implementation of the regulatory regime.” 

Separately, some stablecoin issuers — depending on criteria — would be required to register with the Hong Kong Monetary Authority under a different regulatory proposal. The proposal, made in December of last year, is open for public consultation until Feb. 29

“The proposed regulatory regime will also prohibit the advertising of unlicensed issuers’ stablecoin issuance,” Hui said.

The HKMA said last year that the regulations were meant to encourage virtual asset innovations “in a sustainable manner, while actual and potential risks from the perspectives of monetary and financial stability, consumer protection as well as money laundering and terrorist financing, can be identified and properly addressed.”

Read more: Hong Kong releases crypto ETF requirements ahead of US approval

Hui’s clarity on potential crypto regulation came after receiving a written question on where Hong Kong stands regarding crypto trading regulations.

“The Government and regulators are committed to enhancing the VA regulatory framework, including the introduction of suitable licensing regimes to ensure that service providers concerned comply with the requirements on AML/CTF and investor protection,” Hui said.

Earlier this week, the HKMA issued guidance to firms offering digital asset custodial services.

The guidance includes allocating resources, segregating the client’s digital assets and safeguarding those assets. 

Hong Kong is working to establish itself as a crypto hub, while also ensuring that investors are protected without repeating the FTX or Terra collapses. FTX collapsed in November of 2022, while Terra’s algorithmic stablecoin depegged in the summer of 2022. Both had crippling effects on the crypto industry, which is just now beginning to show signs of a potential bull market. 


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

Regulators in South Korea, Japan and Singapore could follow Hong Kong’s lead as Asia responds to spot bitcoin ETF approval in the US

article-image

Martin Grant worked with the Fed for roughly 30 years before leaving his position in 2022

article-image

BitGo CEO Mike Belshe shared his thoughts on the halving and bitcoin ETFs in an interview with Blockworks

article-image

Crypto markets were largely the only ones open over a tense weekend, and they took a beating for it

article-image

Though some expect most public miners to survive the halving, the segment’s most vulnerable could fall victim to consolidations and defaults

article-image

The US spot bitcoin fund category has notched negative net flows over the course of a week just three times since coming to market in January