April 19, 2024
Latest Cryptocurrency News

Hong Kong and the US to Establish Clear Regulatory Guidelines for Stablecoins by 2024

The Hong Kong Monetary Authority (HKMA) has concluded its public consultation on regulations for stablecoins and plans to establish clear regulatory guidelines for the stablecoin market by the end of 2024.

According to Joseph Chan Ho-Lim, the Under Secretary for Financial Services and the Treasury of the Hong Kong government, Hong Kong has become a growing destination for fintech companies in the past five years. Chan emphasized that authorities are actively working to promote the Web3 ecosystem while prioritizing investor protection.

In January 2022, Hong Kong initiated stablecoin regulations, wherein the HKMA presented a list of eight questions seeking policy recommendations and outlined five potential regulatory outcomes, including taking no action, implementing an opt-in regime, adopting a risk-based regime, establishing a catch-all regime, or implementing a blanket ban. One year later, after the Terra-Luna incident, regulatory discussions prohibited the incorporation of algorithmic stablecoins.

Following the completion of the public consultation phase, the HKMA will focus on areas such as issuance, governance, and stabilization of stablecoins. Hong Kong has taken the lead in crypto regulation this year, while many Western counterparts remain cautious about this emerging technology. The HKMA has not only permitted crypto trading for retail traders but has also implemented a licensing regime for crypto exchanges, which requires strict compliance with anti-money laundering regulations.

Apart from Hong Kong, the United States House Committee is also considering introducing robust regulations for the stablecoin market. In 2023, the US House Committee proposed three draft stablecoin bills, with the latest one granting significant powers to the Federal Reserve and limited intervention authority to state authorities.

The approaches of local regulators in the two countries couldn’t be more different. Hong Kong regulators actively seek to establish the country as a crypto hub, while the actions of US regulators may compel many established businesses, including stablecoin issuers, to relocate. The US Securities and Exchange Commission (SEC) has accused several stablecoin issuers of violating securities laws and has filed a lawsuit against Binance and its stablecoin BUSD, issued by Paxos.

Image by master1305 on Freepik

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