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Hong Kong Prepares for Stablecoin Sandbox Launch

31/01/2024 00:39

According to Bloomberg, the Hong Kong Monetary Authority (HKMA) is preparing to launch a stablecoin sandbox, with details to be announced in due course. Stablecoins, which are typically pegged 1-1 to fiat currencies and backed by reserves of cash and bonds, make up $136 billion of the $1.7 trillion digital-asset market. These blockchain-based tokens facilitate crypto trading and lending but have faced criticism for their potential to disrupt financial stability. A Hong Kong-dollar referenced token could serve as a powerful alternative to US dollar-linked rivals, given the city's well-developed financial sector. Currently, the stablecoin market is dominated by dollar-linked tokens. Hong Kong's eight-month-old virtual-asset rulebook aims to protect investors from risks while encouraging innovation, leading to questions about whether compliance costs could be an obstacle for some businesses. Venture Smart Financial (VSFG) expects the sandbox to begin in the first quarter. However, Hong Kong-based Harvest Global Investments did not respond to a request for comment. RD Technologies' Chief Operating Officer also did not provide any additional information.

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