According to Chinese Media Zhitongcaijing, Christopher Hui, Secretary for Financial Services and the Treasury, reported on the latest developments and measures in financial technology and other innovative financial services in Hong Kong, as well as the progress of virtual asset regulation.

He stated that to seize the opportunities brought by the development of Web3, the Financial Secretary of Hong Kong will establish a dedicated task force to provide recommendations on promoting the sustainable and responsible development of the Web3 industry. In addition, the HKMA is currently formulating a regulatory framework for stablecoins and plans to conduct a second round of public consultation within this year.

Earlier this year, the Hong Kong Monetary Authority released a consultation summary on the discussion paper on crypto assets and stablecoins. The summary document indicates that key activities related to stablecoins will be subject to a mandatory licensing regime.

These key activities include establishing and maintaining regulations for managing stablecoins, issuing, creating, or redeeming stablecoins, stability and reserve management arrangements for stablecoins, 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, including but 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 requirements will also include ensuring that the value of reserve assets for stablecoins always meets the value of outstanding stablecoins. Regulated entities are prohibited from engaging in activities beyond their licensed scope, for example, stablecoin wallet operators should not engage in lending activities.