- Hong Kong will set up a task force to give advice on how to promote the sustainable and responsible development of the Web3 industry.
- The HKMA is drafting a regulatory framework for a stablecoin and plans to conduct a second round of public consultations this year.
According to Chinese media Zhitongcaijing, Christopher Hui, Secretary for Financial Services and the Treasury, commented on the current advances and measures in financial technology and other creative financial services in Hong Kong, as well as the progress of virtual asset regulation.
He noted that in order to capitalize on the prospects presented by the growth of Web3, the Hong Kong Financial Secretary would form a specialized task group to give suggestions on encouraging the sustainable and responsible development of the Web3 sector. Moreover, the Hong Kong Monetary Authority (HKMA) is presently developing a regulatory framework for stablecoins and intends to hold a second round of public consultations later this year.
Early this year, the HKMA produced a consultation summary on the discussion paper on crypto assets and stablecoins. The summary paper says that essential stablecoin operations would be subject to a mandated licensing framework.
These key activities include establishing and maintaining stablecoin management regulations, issuing, creating, or redeeming stablecoins, stablecoin stability and reserve management arrangements, storage of user cryptographic keys, and wallet services that allow users to access and manage their stablecoin holdings.
The HKMA will establish a comprehensive regulatory framework that includes but is not limited to, appropriate regulatory requirements in areas such as ownership, governance, and management, financial resource requirements, risk management, anti-money laundering, and counter-terrorist financing, user protection, regular audits, and disclosure requirements.
The regulatory criteria will also include ensuring that the value of reserve assets for stablecoins always matches the value of outstanding stablecoins. Regulated organizations are not permitted to participate in activities outside of their licensed scope; for example, stablecoin wallet operators should not engage in lending operations.
Hong Kong is becoming a comprehensive economic zone with its opening to foreign businesses. There are presently more than 800 fintech businesses providing a variety of innovative and easy financial services, such as mobile payments, cross-border remittances, blockchain, virtual banking, virtual insurance, and virtual asset trading.
The development of virtual assets is also very important to the Hong Kong administration. In October of last year, a virtual asset policy statement was produced, defining the Hong Kong government’s vision and policy principles. The industry has reacted favorably to this, with numerous mainland and global enterprises showing interest in expanding in Hong Kong, which will aid in the development of Web3 and the cultivation of appropriate skills.
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