While the US is still dealing with the fallout caused by the bankruptcy filing of FTX and the collapse of TerraUSD, the crypto community in China is looking forward to a clearer regulatory regime implemented by the HKMA. However, before it sets out to put new policies in place, the authority is seeking comments from the public regarding stablecoins. When compared to mainland China where crypto trading is illegal, Hong Kong’s approach is much more welcoming, which could be the result of the city’s historical role as a sandbox for the rest of China according to TechCrunch.
In February 2023, the Hong Kong Monetary Authority revealed its intentions to introduce new regulations on crypto assets and stablecoins. At the time, the HKMA was analysing the pros and cons of introducing new regulations or amending existing laws concerning stablecoins. Prior to the reveal, the HKMA issued a discussion paper on crypto-assets and stablecoins on 12 January 2022 and encouraged feedback from stakeholders.
The paper received 58 response submissions from public bodies, business and professional organisations, as well as individuals.
The results showed a favourable disposition towards regulating stablecoins with a risk-based and agile approach adapted to evolving market conditions. HKMA officials talked about the key role of an appropriate regulatory environment and its potential to reduce financial stability risks posed by stablecoins while supporting the sustainable development of the industry.
The Undersecretary for Financial Services and the Treasury in Hong Kong cited by thestandard.com.hk talked about the significant increase in the number of fintech companies in the last five years. He also highlighted Hong Kong’s plans to expand its faster payment system to more industries in partnership with the Bank of Thailand.
The same source reveals that the Hong Kong administration is also focusing on the development of Web3, which could develop steadily in the SAR while also protecting investors and supporting AML efforts.
The growth of Hong Kong's green and sustainable finance market was also brought up, including green and sustainable debt instruments that saw a year-on-year increase of over 40% in 2022. The current administration wants to speed up the development of Hong Kong as an international green technology and financial centre by working on climate information disclosure and carbon market training.
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