Hong Kong Treasury proposes the second reading of the "Stable Coin Bill" and hopes for quick passage to implement regulation

The Hong Kong "Stable Coin Bill" was submitted to the Legislative Council for first reading today (18th) and started the second reading debate. The Secretary for Financial Affairs and the Treasury, Christopher Hui, stated that the purpose of the Bill is to establish a regulatory system for issuers of stablecoins, stipulating that a license must be obtained for regulated stablecoin activities.

Today, Hui Chung Yu proposed the second reading of the "Stable Coin Ordinance Bill" in the Legislative Council meeting. He pointed out that under the proposed licensing system in the Bill, anyone engaging in the regulated activities of Stable Coin must obtain a license:

Carrying out the business of issuing coinStable Coin in Hong Kong;

Conducting the business of issuing Hong Kong dollar Stable Coins; or

Actively promote the issuance of its stablecoin to the Hong Kong public.

Xu Zhengyu mentioned that the regulatory system of Stable Coin issuers mainly focuses on the following 3 key aspects:

In terms of reserves, licensed entities must maintain a sound reserve stabilization mechanism to ensure that the reserve assets of Stable Coin are composed of high-quality and highly liquid assets, with a total value at all times equal to or greater than the circulating legal coin Stable Coin denomination, and properly segregated and safeguarded;

To ensure that the holders of Stable Coin are properly protected, the holders should have the right to redeem Stable Coin from the issuer at face value, and the redemption request must be processed without unreasonable fees and within a reasonable time; and

The regulatory system also stipulates a series of requirements for combating money laundering, risk management, disclosure rules, auditing, and appropriate personnel selection.

He emphasized that the regulatory system also focuses on safeguarding the public and therefore has a series of other requirements. For example, only designated licensed institutions can sell coinStable Coin in Hong Kong, including:

Obtained a license from the financial regulator to issue Stable Coin.

Recognized institutions (i.e. banks);

A corporation licensed by the Securities and Futures Commission to conduct regulated activities of Type 1;

And licensed virtual asset trading platform.

Hsu Zhengyu stated that the "Regulation Draft" empowers the Financial Commissioner with a series of regulatory and investigative powers to effectively implement the system. In terms of regulation, the Financial Commissioner can establish regulations and issue guidelines; in terms of investigation, if the Financial Commissioner has reasonable grounds to believe that someone has committed offenses under this system or violated regulations, he can initiate an investigation and request relevant individuals to provide evidence or assist in the investigation, apply for a search warrant to a judge, etc.

Xu Zhengyu finally urged the Legislative Council to support the quick passage of the 'Regulations Bill,' so that the regulatory system for Stable Coin issuers can be implemented in Hong Kong as soon as possible.

The Hong Kong Treasury proposes the second reading of the "Stable Coin Bill" and hopes for quick passage to implement regulation. This article was first published in "Block Times".