Hong Kong Monetary Authority Launches Stablecoin Issuer Sandbox

Hong Kong Monetary Authority Launches Stablecoin Issuer Sandbox

by March 12, 2024

The Hong Kong Monetary Authority (HKMA) announced the launch of a sandbox arrangement for stablecoin issuers today.

This initiative establishes a communicative platform between the HKMA, and entities interested in issuing fiat-referenced stablecoins in Hong Kong. It is designed to clarify supervisory expectations and gather input on proposed regulatory frameworks during the consultation phase of the legislative proposal for regulating stablecoin issuers.

This move follows a consultation and feedback collection from the market and public on the “Discussion Paper on Crypto-assets and Stablecoins” issued last year. The proposed legislation reflects considerations of market responses, stakeholder engagements, local market needs, and international standards.

It includes the introduction of a licensing regime for fiat-referenced stablecoin (FRS) issuers meeting specific conditions, stipulations on who can offer FRS to retail investors, advertising prohibitions for unlicensed entities or non-specified licensed entities, and measures to adapt to rapid market developments.

Entities interested in participating are expected to present a clear interest in developing a stablecoin issuance business in Hong Kong, backed by a solid business plan, and operate within a controlled and limited scope under the sandbox framework.

Hong Kong Monetary AuthorityEddie Yue

Eddie Yue

“The sandbox arrangement serves as an effective channel for the HKMA and the industry to exchange views on the proposed regulatory regime and will facilitate the formulation of fit-for-purpose and risk-based regulatory requirements, which is key to promoting the sustainable and responsible development of the stablecoin issuance business,”

said Eddie Yue, Chief Executive of the Hong Kong Monetary Authority.

Featured image credit: Edited from Freepik