The Hong Kong Monetary Authority (HKMA) is formulating a regulatory regime for stablecoin issuers in Hong Kong, recognising the growing interconnectedness between the traditional financial system and virtual asset markets.

As part of this effort, the HKMA has launched a sandbox arrangement to facilitate dialogue between the HKMA and industry stakeholders on the proposed regulatory requirements.

The sandbox arrangement allows the HKMA to communicate supervisory expectations and guidance on compliance to entities interested in issuing fiat-referenced stablecoins in Hong Kong. It also provides a platform for participants to share feedback on the proposed regulatory framework.

The HKMA has admitted the following participants to the sandbox, effective 18 July 2024: JINGDONG Coinlink Technology Hong Kong Limited, RD InnoTech Limited, Standard Chartered Bank (Hong Kong) Limited, Animoca Brands Limited, and Hong Kong Telecommunications (HKT) Limited.

The sandbox arrangement for stablecoin issuers enables the HKMA to provide supervisory guidance and obtain industry feedback on regulatory requirements. Details of the sandbox arrangement are available on the HKMA website.

During the evaluation process, the HKMA may request additional information from applicants. According to HKMA, to be considered for the stablecoin sandbox, applicants must demonstrate a genuine interest in and a reasonable plan for issuing fiat-referenced stablecoins in Hong Kong.

They must also present a concrete plan for participating in the sandbox and show a reasonable prospect of complying with the proposed regulatory requirements.

Featured image credit: Edited from Freepik