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Hong Kong has initiated a sandbox arrangement for stablecoin issuers to establish regulations for future operations.
This move aligns with its objective to become a regional key player in the cryptocurrency sector. The Hong Kong Monetary Authority (HKMA) introduced the sandbox to set supervisory standards for entities interested in issuing fiat-referenced stablecoins within Hong Kong.
Following a consultation period that concluded on Feb. 29 regarding stablecoin regulation, the HKMA, the Financial Services, and the Treasury Bureau in December had already suggested mandatory licensing for all fiat-referenced stablecoin issuers by the HKMA.
Eddie Yue, the HKMA’s chief executive, emphasized that the sandbox would facilitate dialogue between the HKMA and industry stakeholders, contributing to developing appropriate and risk-based regulatory requirements. This approach is essential for the stable and responsible expansion of the stablecoin issuance sector.
Applicants for the sandbox are expected to present viable business plans and ensure their operations are manageable and limited in scope.
“We see there’s a very good demand. It is still a very, very small market — lots of room to grow for not only us — but I think there are a lot of new stablecoins that will be coming on the market fairly soon,” said Vincent Chok, chief executive officer of First Digital, the issuer of FDUSD stablecoin. “We know that there are a lot of people that are lining up to apply for this Hong Kong stablecoin licensing as well.”
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