Hong Kong is aiming to finalize stablecoin regulations by mid-2024, highlighting the territory’s contrasting approach to mainland China.
Legislative Council member Duncan Chiu has signaled that Hong Kong is on track to finalize its stablecoin regulations by mid-2024. The announcement was made at the Shanghai Blockchain International Week, according to a local news outlet.
Hong Kong potentially wants to establish the region as a web3 nexus, driven by regulations and diverging from China’s more restrictive stance on cryptocurrency.
Regulatory roadmap for Hong Kong’s stablecoin regulation
Chiu revealed that the legislative body is presently in its second consultation phase to formulate guidelines for stablecoin issuers. This marks a significant step in the region’s effort to foster a crypto-friendly environment, as it follows the introduction of a licensing system for cryptocurrency exchanges back in June. The licenses permitted the exchanges to offer retail trading services in a range of digital assets.
While China intensifies its clampdown on cryptocurrency activities, Hong Kong is setting itself apart by actively inviting crypto enterprises. The territory’s proactiveness in regulatory clarity could serve as an essential catalyst for attracting international crypto firms and solidifying its web3 hub status.
Crypto regulations have become a significant concern for Hong Kong, especially after this week’s JPEX scandal.
Hong Kong officials have cracked down on purported crypto fraud, arresting six people, including two well-known social media influencers linked to the JPEX platform. The exchange has allegedly conducted fraudulent activities, with investigations leading to the arrest of eight individuals and may lead to more. The case involves withdrawal issues amounting to roughly $152 million, serving as a cautionary tale for the risks involved in the rapidly evolving crypto landscape.
Notably, some sector specialists have called for more aggressive action from the Hong Kong government. Experts have lobbied for the creation of a government-backed stablecoin, tentatively named HKDG, to compete directly with established stablecoins such as USDT and USDC. These advocates argue that the existing plan, which allows for stablecoins to be issued by private institutions, lacks ambition and leaves the territory vulnerable to external financial influences.