- Hong Kong is keen on actualizing stablecoin regulation.
- The city announced an important step toward this realization on Wednesday.
- The announcement comes as the government plans to introduce two crypto bills this year.
Hong Kong is keen on introducing a regulatory sandbox to test stablecoin issuance in a controlled environment, financial secretary Paul Chan said on Wednesday.
The development comes after the Hong Kong government revealed on February 21 that it would initiate licensing bills for stablecoin issuers and over-the-counter (OTC) crypto trading operators once public consultations on two legislative proposals are over.
Regulatory Sandbox for Testing Stablecoins
While announcing 2024’s budget proposal on February 28, Chan stated that the Hong Kong Monetary Authority plans to launch a regulatory sandbox for issuers to test out various aspects of stablecoins.
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According to Chan, the sandbox will allow companies interested in launching stablecoins in the city to test the issuance process, business models, investor protection measures, and risk management systems in a controlled environment supervised by regulators.
Chan further stressed the importance of regulation in driving Web3 development.
“Cybersecurity, alongside investor and customer protection are matters of utmost importance in web 3.0 development, embracing the principle of ‘same activity, same risks, same regulation,” Chan said.
Chan’s announcement underscores Hong Kong’s commitment to fostering a thriving, regulated digital assets ecosystem. Following the principle of “same business, same risk, same rules,” Hong Kong’s Securities and Futures Commission (SFC) inaugurated a licensing regime for crypto exchanges in June last year.
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The regime follows stringent anti-money laundering (AML) standards and provides robust protection measures for investors, positioning Hong Kong ahead of other jurisdictions in terms of crypto regulation.
Read why the SFC accused MEXC of crypto-related fraud:
Hong Kong Flags MEXC for Suspected Crypto-Related Fraud
Stay updated on why Hong Kong crypto exchanges must register:
Hong Kong Crypto Exchanges Must Register: SFC Issues Warning
