Hong Kong's proposed Stablecoins Bill has moved forward in the Legislative Council, signaling progress toward a structured regulatory framework for stablecoins in the region.
Hong Kong's proposed Stablecoins Bill has moved forward in the Legislative Council, signaling progress toward a structured regulatory framework for stablecoins in the region.
The bill was published in the Hong Kong Gazette on Dec. 6 and introduced to the Legislative Council for its first reading on Dec. 18.
The legislation encompasses three critical components: licensing requirements for stablecoin issuers, restrictions on offerings and marketing, and enhanced consumer protections. If enacted, the bill mandates that all stablecoin issuers in Hong Kong obtain a license from the Hong Kong Monetary Authority (HKMA), the region's central banking authority.
To secure this license, issuers will undergo an evaluation process that assesses their controllers, resources, and the mechanisms used to stabilize the value of their stablecoins.
Only entities that meet regulatory standards will be permitted to issue or market stablecoins to the public.
Consumer protections outlined in the bill aim to safeguard various market participants, including stablecoin issuers and distributors. This legislative effort reflects a broader trend observed in Europe following the implementation of the Markets in Crypto-Assets (MiCA) regulations.
Research from Kaiko and crypto exchange Bitvavo indicates that the MiCA framework has significantly transformed the European stablecoin market, with compliant issuers gaining substantial market share.
By late 2024, MiCA-compliant stablecoins were reported to control approximately 91% of the market, following the discontinuation of non-compliant offerings like Tether's euro-backed stablecoin.
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