- If the bill becomes a law, issuers of stablecoins in Hong Kong must get a license from the Hong Kong Monetary Authority (HKMA), the central bank of the region.
- The bill offers a shield for customers that affects the numerous market participants, adding issuers and distributors.
- If the bill is imposed, Hong Kong may see a transformation in stablecoin use as followed by Europe when the Markets in Crypto-Assets (MiCA) rules came into action.
The presented idea of the Stablecoins Bill by Hong Kong has set its foot into the Legislative Council, taking the area nearer to building up a comprehensive regulatory regime for stablecoins.
On December 6, the government of Hong Kong proposed a bill in the special administrative Gazette of the region, taking it forward to becoming law. On December 18, the bill stepped up to the Legislative Council of the country for the first reading.
What if the bill becomes law?
Before the proposed bill becomes law, it must undergo three readings, which include a set of debates, examinations as well as potential alterations. When the bill goes through the third reading, it will be sent directly to the chief executive of the region, who will sign it to become law.
As per the law company King and Wood Mallesons, the Stablecoins Bill consists of three major components. They consist of stablecoin issuer licensing and needs, a particular stablecoin offering, and marketing limitations with wider consumer protections.
If the bill becomes a law, issuers of stablecoins in Hong Kong must get a license from the Hong Kong Monetary Authority (HKMA), the central bank of the region. Issuers must adhere to the comprehensive needs to get a license.
The regulators will then hold the responsibility of assessing the issuer as well as its controllers, resources, stablecoins, reserve assets, and the mechanism maintaining its worth. Only regulated bodies along with platforms will get permission to provide stablecoins in the country or to publicize it.
Transformation similar to Europe
The bill offers a shield for customers that affects the numerous market participants, adding issuers and distributors. If the bill is imposed, Hong Kong may see a transformation in stablecoin use as followed by Europe when the Markets in Crypto-Assets (MiCA) rules came into action.
On December 18, the research company Kaiko and Bitvavo reported that the launch of MiCA notably transformed the stablecoin environment within the boundaries. At the same time, issuers such as Tether suspended its Euro-backed stablecoin, and compliant issuers have flourished.
By the last month, MiCA-compliant stablecoins occupied the majority of the market, having Circle, Societe Generale, and Banking Circle’s stablecoins having a 91% market share by the end of this year.
