Thursday, May 19, 2022

Hong Kong begins discussions to introduce stablecoin regulatory framework


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Hong Kong’s central banking establishment, the Hong Kong Financial Authority (HKMA), launched a questionnaire to gauge public opinion on laws for crypto-assets and stablecoins. The state-backed regulator intends to determine a regulatory framework by 2023-24.

HKMA’s “Dialogue Paper on Crypto-assets and Stablecoins” highlights the explosive progress of the stablecoin market by way of market capitalization since 2020 and the concurrent regulatory suggestions put forth by worldwide regulators together with the USA’ Monetary Motion Activity Drive (FATF), the Monetary Stability Board (FSB) and The Basel Committee on Banking Supervision (BCBS).

Market Capitalization of Crypto-assets. Supply: HKMA

According to the HKMA, the present dimension and buying and selling exercise of crypto-assets could not pose a direct risk to the steadiness of the worldwide monetary system from a systemic perspective. Nonetheless, the dialogue paper warned:

“The rising publicity of institutional traders to such belongings as an alternative choice to or to enhance conventional asset courses for buying and selling, lending and borrowing […] point out rising interconnectedness with the mainstream monetary system.”

Market Capitalization of Main Stablecoins. Supply: HKMA.

Primarily based on the above determine, HKMA’s paper exhibits that the worldwide market capitalization stood at about $150 billion in December 2021, “representing about 5% of the general crypto-asset market.” The regulator has additionally shared a listing of eight questions to hunt policy-related suggestions citing 5 attainable regulatory outcomes — no motion, opt-in regime, risk-based regime, catch-all regime and blanket ban:

Doable coverage choices for regulating crypto-assets. Supply: HKMA.

HKMA expects stakeholders to submit their responses by thirty first March 2022, and goals “to introduce the brand new regime no later than 2023/24.”

Main jurisdictions’ regulatory stance in the direction of stablecoins. Supply: HKMA.

On an finish notice, the regulator said that payment-related stablecoins have the next potential for being included into the mainstream monetary system and even day-to-day business and financial actions. 

Consequently, the HKMA considers increasing the scope of the Fee Methods and Saved Worth Services Ordinance (PSSVFO), a legislation that determines the legality of monetary merchandise. 

Associated: Hong Kong real estate giant leads $90M raise for crypto bank Sygnum

Complementing the native authorities’s pro-crypto intentions, considered one of Hong Kong’s largest property builders Solar Hung Kai invested $90 million in Sygnum, a Swiss financial institution devoted to digital asset holding.

As Cointelegraph reported, the Collection B funding spherical brings Sygnum’s post-money valuation to $800 million, marking a tenfold surge in consolidated revenues from 2021.