Hong Kong Stablecoins Bill Gazetted: Licensing Regime for Fiat-Referenced Issuers

The Bill will be introduced into the Legislative Council for first reading on 18 December 2024.

Who would need a licence

Under the proposed regime, any person carrying on any of the following activities would need a licence from the Monetary Authority:

• issuing FRS in Hong Kong in the course of business;
• issuing FRS that purport to maintain a stable value by reference to the Hong Kong dollar in the course of business; or
• actively marketing its issue of FRS to the public of Hong Kong.

The Bill would also give the Monetary Authority supervision, investigation and enforcement powers. The government said the proposal is essential for Hong Kong to fulfil its obligations as a member of the Financial Stability Board and follows the principle of same activity, same risks, same regulation.

How the Bill was developed

The Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority published consultation conclusions in July 2024. They reported 108 submissions to a two-month consultation completed in February 2024, with a vast majority of respondents agreeing that a regulatory regime should be introduced for FRS issuers and general support for the proposed requirements. At that time the HKMA was also processing applications for a stablecoin issuer sandbox.

What it means for the market

The Hong Kong Stablecoins Bill would bring stablecoin issuance within a dedicated licensing regime overseen by the Monetary Authority. Banks, payment firms and virtual asset businesses considering a Hong Kong dollar or other fiat-referenced token should follow the Bill's passage through the Legislative Council and prepare for licensing requirements, while offshore issuers will need to consider whether their marketing to Hong Kong users could bring them within scope.

Sources

• Hong Kong Government: Gazettal of Stablecoins Bill
• Hong Kong Monetary Authority: Consultation conclusions on legislative proposal for stablecoin issuers