Hong Kong’s central financial institution is inviting international stablecoin operators to answer its proposed guidelines.
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Hong Kong’s central financial institution, the Hong Kong Financial Authority (HKMA), desires to oversee stablecoin issuance and reserves administration.
HKMA printed a dialogue paper on Jan. 12 concerning cryptocurrencies and stablecoins, through which it offered its views on how the business must be regulated in Hong Kong.
Within the 34-page lengthy session doc, the HKMA paid particular consideration to “payment-related stablecoins,” stating that the market capitalization of all stablecoins hit $150 billion in December, accounting for five% of your complete crypto market. The regulator added that each one current stablecoins are “largely asset-linked and predominantly pegged” to the USA greenback, together with stablecoins like Tether (USDT) and USD Coin (USDC).
“The speedy improvement of crypto-assets, significantly stablecoins, is a subject of eager consideration within the worldwide regulatory group because it presents potential dangers concerning financial and monetary stability,” HKMA mentioned.
In an effort to successfully deal with related dangers, HKMA laid out eight main coverage instructions, proposing to develop into a single regulator to oversee entities concerned in each regulating and working operations like issuing stablecoins and managing their reserves. The authority additionally desires to control stablecoin transactions’ validation processes, personal key storage administration and executing transactions.
“We encourage present or potential gamers within the stablecoins ecosystem to answer this paper and submit related views to us, in order that we might take the suggestions under consideration when formulating the regulatory framework,” HKMA wrote. The regulator expects to finalize its subsequent steps as quickly as potential and introduce new laws by 2023 or 2024.
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HKMA just isn’t the one monetary regulator involved about stablecoin dangers and planning steps to control the rising business. In November 2021, the U.S. President’s Working Group on Monetary Markets issued a report on potential “stablecoin runs” and “cost system dangers.” The U.S. Treasury subsequently hinted at new stablecoin-focused legal guidelines in December.