The bill includes licensing requirements for stablecoin issuers, supply and marketing restrictions, and broad consumer protections.
Hong Kong’s proposed stablecoin bill has been submitted to the Legislative Council, bringing the region closer to creating a comprehensive stablecoin regulatory system.
On December 6, the Hong Kong government published the bill in the SAR Official Gazette, bringing it closer to enactment. On the 11th In 2018, the bill was submitted to the Hong Kong Legislative Council for its first reading.
The bill must go through three readings, which include a series of debates, considerations, and possible amendments, before it can become law. If the bill passes the third reading, it will be sent to the territory’s head of government, who will sign the bill into law.
Key Components of the Stablecoin Bill
According to law firm King & Wood Mallesons, the Stablecoin Bill has three key components. These include licensing and requirements for stablecoin issuers, specific stablecoin offerings, and marketing restrictions with extensive consumer protections. Once the bill comes into effect, stablecoin issuers in Hong Kong will be required to obtain a license from the territory’s central bank, the Hong Kong Monetary Authority (HKMA). Issuers will have to meet comprehensive requirements to obtain a license.
The regulator will assess issuers and their managers, resources, stablecoins, reserve assets, and mechanisms for stabilizing their value. Only regulated companies and platforms will be allowed to offer or publicly sell stablecoins in Hong Kong.
The bill provides consumer protections that will affect a range of market participants, including issuers and traders.
MiCA-compliant stablecoins take Europe by storm
If the bill passes, Hong Kong could see a similar shift in stablecoin usage as Europe saw when the MiCA regulation came into effect.
On December 18, research firm Kaiko and Dutch cryptocurrency exchange Bitvavo reported that the launch of MiCA has significantly changed the stablecoin landscape in the region.
Compliant issuers have flourished while issuers like Tether have stopped issuing euro-backed stablecoins. By November, MiCA-compliant stablecoins made up the majority of the market, with Circle, Societe Generale and Banking Circle stablecoins poised to account for 91% market share by the end of 2024.
