Hong Kong Initiates Consultation on Stablecoin Regulations

    Hong Kong’s HKMA launches a 30-page consultation paper on stablecoin regulations, emphasizing the need for “full backing” and regular disclosure. The proposed framework aims to mitigate crypto-related risks in the traditional financial system. Stakeholders can provide feedback until Feb. 24.

    Hong Kong has entered a crucial phase in shaping its crypto regulatory landscape. The Hong Kong Monetary Authority (HKMA) recently unveiled a thirty-page consultation paper, soliciting public input until Feb. 24. The proposed regulatory framework mandates stablecoin issuers to secure a license from the HKMA.

    Under the outlined framework, stablecoin issuers must ensure “full backing” for their circulating stablecoins. This move comes in response to the mid-2022 collapse of Terra’s algorithmic UST stablecoin, which was only partially backed. The HKMA asserts that the incident underscores the urgency of establishing stablecoin regulations.

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