The government of Hong Kong has suggested approving and controlling fiat-pegged stablecoins (FRS).
The paper states that stablecoins will be available for purchase by retail investors through the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA), but that the issuers of these coins will need to receive a unique local license from the HKMA.
Companies must segregate and retain reserve assets, support all stablecoins in circulation with reserves equivalent to their face value, disclose their operations, and submit reports regularly to be granted a license.
Along with hiring a CEO, senior management group, and other essential staff, they must also set up shop in Hong Kong. On the other hand, licenses will not be available to Algorithmic Stablecoin Issuers. Hui Ching, Treasury Bureau Director stated:
“Implementing law enforcement and enforcement arrangements can properly manage the actual and potential risks associated with developing stablecoins in Hong Kong and be consistent with international standards.”
The Securities and Futures Authority (SFC) of Hong Kong decided to formally permit ordinary investors to trade cryptocurrencies in May. Retail investors will be allowed to sell Bitcoin (BTC) and Ether (ETH) by the SFC.
However, there will be stringent security controls in place. For retail trading to be permitted, cryptocurrencies must have no “bad incidents” for a full year. Furthermore, cryptocurrencies need to be represented in two or more indices.
Moreover, the SFC declared in December that it was prepared to take applications for introducing bitcoin ETFs. The agencies’ joint statement highlights that they have reevaluated their current guidelines and procedures concerning businesses and middlemen who want to get involved in Bitcoin.