Hong Kong begins discussions to introduce stablecoin regulatory framework

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The Hong Kong Monetary Authority shared a database of 8 questions to question policy-related recommendations citing 5 imaginable regulatory outcomes — nary action, opt-in regime, risk-based regime, catch-all authorities and broad ban.

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Hong Kong begins discussions to present  stablecoin regulatory framework

Hong Kong's cardinal banking institution, the Hong Kong Monetary Authority (HKMA), released a questionnaire to gauge nationalist sentiment connected regulations for crypto-assets and stablecoins. The state-backed regulator intends to found a regulatory model by 2023-24.

HKMA’s “Discussion Paper connected Crypto-assets and Stablecoins” highlights the explosive maturation of the stablecoin marketplace successful presumption of marketplace capitalization since 2020 and the concurrent regulatory recommendations enactment distant by planetary regulators including the United States’ Financial Action Task Force (FATF), the Financial Stability Board (FSB) and The Basel Committee connected Banking Supervision (BCBS).

Market Capitalization of Crypto-assets. Source: HKMA

According to the HKMA, the existent size and trading enactment of crypto-assets whitethorn not airs an contiguous menace to the stableness of the planetary fiscal strategy from a systemic constituent of view. However, the treatment insubstantial warned:

“The increasing vulnerability of organization investors to specified assets arsenic an alternate to oregon to complement accepted plus classes for trading, lending and borrowing [...] bespeak increasing interconnectedness with the mainstream fiscal system.”
Market Capitalization of Major Stablecoins. Source: HKMA.

Based connected the supra figure, HKMA’s insubstantial shows that the planetary marketplace capitalization stood astatine astir $150 cardinal successful December 2021, “representing astir 5% of the wide crypto-asset market.” The regulator has besides shared a database of 8 questions to question policy-related recommendations citing 5 imaginable regulatory outcomes — nary action, opt-in regime, risk-based regime, catch-all authorities and broad ban:

Possible argumentation options for regulating crypto-assets. Source: HKMA.

HKMA expects stakeholders to submit their responses by 31st March 2022, and aims “to present the caller authorities nary aboriginal than 2023/24.”

Major jurisdictions’ regulatory stance towards stablecoins. Source: HKMA.

On an extremity note, the regulator stated that payment-related stablecoins person a higher imaginable for being incorporated into the mainstream fiscal strategy oregon adjacent day-to-day commercialized and economical activities. 

As a result, the HKMA considers expanding the scope of the Payment Systems and Stored Value Facilities Ordinance (PSSVFO), a instrumentality that determines the legality of fiscal products. 

Related: Hong Kong existent property elephantine leads $90M rise for crypto slope Sygnum

Complementing the section government’s pro-crypto intentions, 1 of Hong Kong’s largest spot developers Sun Hung Kai invested $90 cardinal successful Sygnum, a Swiss slope dedicated to integer plus holding.

As Cointelegraph reported, the Series B backing circular brings Sygnum’s post-money valuation to $800 million, marking a tenfold surge successful consolidated revenues from 2021.

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