Hong Kong Legislative Council deliberates on the Stablecoin Bill for the first time: Licensees must maintain a robust reserve stabilization mechanism

Odaily Planet Daily News The relevant bill committee of the Hong Kong Legislative Council reviewed the "Stablecoin Bill" for the first time yesterday. The Deputy Secretary-General of the Financial Services and the Treasury Bureau, Ho Siu-hong, said that stablecoin products issued in Hong Kong or overseas with reference to the Hong Kong dollar must obtain a license. Licensees must maintain a robust reserve stability mechanism to ensure that the reserve assets of stablecoins are composed of high-quality and highly liquid assets, with a total value at all times at least equal to the denomination of the fiat stablecoins in circulation, and must be properly separated and kept. Ho Siu-hong emphasized that stablecoin licensees will be regulated with the same business, the same risks, and the same rules. It is understood that the "Stablecoin Bill" was first read on December 18, 2024 and is expected to be passed and become law in the next few months. The proposed legislation will bring the licensing of stablecoins under the supervision of the HKMA, which is responsible for supervising all banking activities in Hong Kong. Ho Hon Kit, Assistant Director (Monetary Management) of the HKMA, said that the HKMA's regulatory mechanism refers to the standards of the Financial Stability Board (FSB), an international organization. Although the plan is currently in the early stages of exploration, it is believed that it will eventually be mutually recognized like the banking system. At present, there are licensed companies of stored value payment tools participating in the "sandbox" to pilot cross-border payments. Qualifications for issuing stablecoins: Providing stablecoins or engaging in specific activities related to stablecoins without a license or special exemption granted by the HKMA will be classified as a criminal offense; Scope of application: Institutions that conduct stablecoins in and outside Hong Kong and actively issue stablecoins targeting the Hong Kong public; Qualifications for applying for a stablecoin license: Stablecoin licenses are only granted to Hong Kong companies or overseas authorized institutions that have been licensed by the HKMA to conduct banking activities in Hong Kong; Stablecoin license management regulations: Board members do not need to be Hong Kong residents, but applicants must have three key management personnel residing in Hong Kong; License period: Stablecoin licenses have no deadline, but can be revoked by the HKMA. (Ta Kung Pao)