Lawmaker Raises Red Flags Over Hong Kong’s Stablecoin Regulation Proposal
Today, Hong Kong’s financial authorities—the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA)—unveiled their plan to implement new stablecoin regulations. Not everyone thinks this is a good development for crypto markets, however.
Under the proposal, Hong Kong will require stablecoin issuers to obtain local licensing and comply with governance, risk management, and anti-money laundering/counter-terrorist financing (AML/CFT) standards. The regulators stated that only coins issued by licensed firms could be offered to retail investors.
Additionally, licensed entities must establish a Hong Kong-based leadership team and maintain high-quality, segregated reserves. The public can submit feedback on the proposal until February 29, 2024.
Hong Kong lawmaker Johnny Ng highlighted concerns about the policy on X. He noted that major global stablecoins like USDT and USDC already circulate without local licensing.
Ng questioned how these international coins could be traded on licensed Hong Kong exchanges under the new rules. Failure to address this could reduce trading volumes and disrupt transactions, sparking unintended consequences.
The lawmaker also pointed to ambiguity around potential transaction fees and stablecoin applications under the regulations.
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