Hong Kong has introduced a new sandbox program for stablecoin issuers to establish regulations for their future operations. This initiative is in line with the city’s goal of becoming a key player in the cryptocurrency industry. The Hong Kong Monetary Authority (HKMA) launched the sandbox to set supervisory standards for entities looking to issue stablecoins that are backed by fiat currencies within Hong Kong.
After a consultation period that ended on February 29th on stablecoin regulations, the HKMA, along with the Financial Services and the Treasury Bureau, had proposed mandatory licensing for all fiat-referenced stablecoin issuers by the HKMA back in December.
Eddie Yue, the chief executive of HKMA, highlighted that the sandbox will facilitate communication between the HKMA and industry stakeholders, helping to establish appropriate and risk-based regulatory requirements. This approach is crucial for the stable and responsible growth of the stablecoin issuance sector.
Those applying for the sandbox are required to present viable business plans and ensure that their operations are manageable and limited in scope.
Vincent Chok, the CEO of First Digital, the issuer of FDUSD stablecoin, stated, “We see there’s a very good demand. It is still a very, very small market — lots of room to grow for not only us — but I think there are a lot of new stablecoins that will be coming on the market fairly soon. We know that there are a lot of people that are lining up to apply for this Hong Kong stablecoin licensing as well.”
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