Hong Kong Monetary Authority Announces Stablecoin Regulation Plan –

Considering the growing popularity and craze for stablecoins in the global financial sector, Hong Kong’s central bank, the Hong Kong Monetary Authority, have shared plans to regulate the industry.On Wednesday, the Banking Authority release related discussion papers cryptocurrency and stablecoins. The document highlights various key indicators of the strategies Hong Kong regulators should adopt in controlling and managing the local virtual currency market space.

The Hong Kong Monetary Authority (HKMA) said the entity looks forward to overseeing the issuance process of stablecoins in Hong Kong and the management of reserves. The 34-page document specifically highlights the fast-growing stablecoin industry. The MAS’ reference to “payments-related stablecoins” in the consultation paper points to the asset class’s recent super success.

The market cap of all stablecoins reached $150B in December, accounting for 5% of the entire crypto space. The bank added that all current stablecoin projects are mostly asset-pegged and backed by the U.S. dollar. The list includes popular tokens such as Tether (USDT) and USD Coin (USDC). The frequent visitor emphasized that the growing rise of cryptocurrencies, especially stablecoins, is a concern of the international regulatory community. The MAS believes that this implies a threat that could adversely affect the monetary and financial stability of the global economic system.

In its report, the HKMA mentioned eight important policy measures to effectively manage the financial risks associated with cryptocurrencies. The bank has proposed to be the sole regulator overseeing entities involved in regulating and enforcing related industry operations, such as stablecoin issuance and reserve management. The entity also wants to control the verification system, private key storage process, and transaction execution for stablecoin transactions.

The team has urged stablecoin-focused companies to share their thoughts on the paper after reading it, in order to promote a healthy feedback system. Regulators will use these recommendations when developing regulatory settings. The HKMA team is preparing to put the final touches on the plan and publish new supervisory guidelines by 2023 or 2024. Central banks from around the world are working to develop a regulated framework for cryptocurrency and stablecoin projects.