Hong Kong’s Legislative Council discusses new stablecoin bill amid crypto hub push

Hong Kong’s Legislative Council has convened for the first time to discuss the government’s proposed stablecoin bill since its first reading in December, as the region rushes to establish proper regulation in a drive to become a cryptocurrency hub.

A Legislative Council committee dedicated to the “Stablecoins Bill” held a meeting on Tuesday with key government officials in attendance to discuss details of the proposed regulation. 

According to the local newspaper Da Kung Pao, Francis Ho, deputy secretary for Financial Services and the Treasury (FSTB), said at the meeting that regulators intend to require stablecoin issuers to obtain a license from the Hong Kong Monetary Authority (HKMA).

The  bill , submitted to the Legislative Council on Dec. 18 for first reading, would also require stablecoin issuers to maintain a robust reserve stabilization mechanism and ensure that stablecoin reserve assets are composed of high-quality and highly liquid assets. 

Hong Kong has rolled out the welcome mat for crypto firms by enacting a crypto licensing regime for crypto trading platforms in 2023. In March last year, the HKMA launched a sandbox for stablecoin issuers. It has admitted participants , including Standard Chartered Bank, Animoca Brands, Hong Kong Telecommunications, Jingdong Coinlink and RD InnoTech.

Meanwhile, another Legislative Council subcommittee for crypto development also convened on Tuesday to discuss the current licensing regime for crypto trading platforms.

At the meeting, Joseph Chan, the FSTB's undersecretary, said that the Securities and Futures Commission will set up a consultation panel for crypto trading platforms to “ensure their views and needs are fully considered.”

Chan also said that the authorities are considering regulating over-the-counter crypto trading and conducted the first round of public consultation last year. The regulators plan to initiate a second round of consultation this year.

According to Chan, the authorities are also drafting licensing regulations for crypto custodians and aim to release them for public consultation this year.