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HKMA published conclusions to Crypto-assets and Stablecoins discussion paper

29 March 2023

The Hong Kong Monetary Authority (“HKMA”) has published its consultation conclusions on Crypto-assets and Stablecoins.

HKMA published conclusions to the discussion paper on Crypto-assets and Stablecoins that was issued in January 2022, highlighting feedback received.

The 2022 paper outlined the HKMA’s thoughts on the development of a regulatory framework for Stablecoins1 and invited feedback from stakeholders. The policy objectives are to safeguard Hong Kong’s monetary and financial stability while supporting financial innovation, and to adopt the relevant international regulatory recommendations.


The HKMA will start with regulating Stablecoins that aim to reference one or more fiat currencies.

Key activities that are related to an in-scope Stablecoin

  1. Governance: establishment and maintenance of the rules governing an in-scope Stablecoin arrangement
  2. Issuance: issuing, creation or destroying an in-scope Stablecoin
  3. Stabilisation: reserve management arrangements of an in-scope Stablecoin
  4. Wallets: provision of services that allow the storage of the users’ cryptographic keys which enable access to the users’ holdings of an in-scope Stablecoin and the management of such Stablecoins

Entities will require a license if they

  • Conduct a regulated activity in Hong Kong
  • Actively market a regulated activity to the public of Hong Kong
  • Conduct a regulated activity which concerns a Stablecoin that purports to reference to the value of the Hong Kong Dollar

Key Regulatory Principles

Comprehensive regulatory framework: appropriate regulatory requirements will be developed on areas such as but not limited to:

  • Ownership
  • Governance and management
  • Financial resources requirements
  • Risk management
  • Anti-Money Laundering and Counter-Terrorist Financing (“AML/CTF”)
  • User protection
  • Regular audits and disclosure requirements

Full backing and redemption at par: the value of the reserve assets of a Stablecoin arrangement should meet the value of the outstanding Stablecoins at all times. The reserve assets should be of high quality and high liquidity. Stablecoins that derive their value based on arbitrage or algorithms will not be accepted. Stablecoin holders should be able to redeem the Stablecoins into the referenced fiat currency at par within a reasonable period.

Principal business restriction: the regulated entities should not conduct activities that deviate from its principal business as permitted under their relevant licenses.

HKMA’s responses

  • The HKMA will adopt a risk-based “same risk, same regulation” approach to regulate the relevant entities and activities
  • The HKMA will prioritise the regulation of Stablecoins at this stage and monitor the interconnectedness between other Crypto-assets and the mainstream financial system
  • The HKMA will continue to have regard for the monetary and financial stability risks that may be posed by different categories of Crypto-assets
  • The HKMA agrees that, regarding the possible cross border use cases of Stablecoins, there should be efficient and effective cooperation and coordination among relevant financial regulators

Next Steps

The HKMA intends to develop an agile, risk based regulatory regime for Stablecoins with requirements to be applied in a proportionate manner. The HKMA is also assessing whether to introduce a new legislation or amend existing laws. There is a target implementation date planned for 2023/24.

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