Hong Kong Monetary Authority (HKMA) plans to regulate stablecoin reserves

• The Hong Kong Monetary Authority is seeking public opinions on rules that would license and supervise stablecoins
• HKMA is inviting global stablecoin operators to respond
• The $150 billion stablecoin market is growing exponentially as a means of payment

Hong Kong’s national bank, the Hong Kong Monetary Authority (HKMA), needs to direct stablecoin issuance and store the executives.

HKMA distributed a conversation paper on Wednesday with respect to digital currencies and stablecoins in which it gave its perspectives on the way that the business ought to be directed in Hong Kong.

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In the 34-page long meeting report, the HKMA really focused on installment related stablecoins, calling attention to the fact that the market capitalization of all stablecoins hit $150 billion in December, representing 5% of the whole crypto market. 

The controller added that all current stablecoins are generally resource connected and transcendently fixed to the United States dollar, including stablecoins like Tether (USDT) and USD Coin (USDC).

All existing stablecoins are mostly asset linked

The fast improvement of crypto-resources, especially stablecoins, is a subject of sharp consideration in the global administrative local area as it presents potential dangers in regards to money related and monetary security, HKMA said.

To effectively deal with related dangers, HKMA spread out eight significant strategy headings, proposing to turn into a solitary controller to oversee elements associated with both directing and running tasks like giving stablecoins and dealing with their stores. The authority additionally needs to direct stablecoin exchanges’ approval processes, private key stockpiling the board and executing exchanges.

They support current or imminent players in the stablecoins environment to react to this paper and submit applicable perspectives to us, so they could consider the input while figuring out the administrative system, HKMA composed. 

The controller hopes to settle its subsequent stages quickly and present new guidelines by 2023 or 2024.

HKMA laid out 8 major policy directions

HKMA isn’t the main monetary controller worried about stablecoin dangers and arranging steps to direct the developing business. 

In November 2021, the U.S. The President’s Working Group on Financial Markets gave a report on conceivable stablecoin runs and installment framework hazards. The U.S. Depository consequently alluded to new stablecoin-centered laws in December.

The US$150 billion market cap of stablecoins as of December represented around 5% of the generally crypto-resource market, as indicated by crypto information supplier CoinMarketCap.

Stablecoins are broadly utilized for decentralized money, or DeFi, which empowers their holders to loan them out to outsider blockchain stages as a trade-off for a yield.

Somewhere in the range of 2020 and 2021, DeFi clients and financial backers lost over US$12 billion because of robbery and misrepresentation, as per crypto investigation supplier Elliptic. 

In the meantime, how much cash dealt with by related administrations, which incorporate overseeing stablecoins and other crypto resources, grew 18-overlay over the previous year to US$247 billion.