Cryptocurrency regulations are one of the growing concerns around the world as some countries intend to become crypto hotspots. These countries are keen on formulating and implementing well-defined crypto regulations. Hong Kong is one such jurisdiction that intends to formulate and implement sound crypto regulations.
Hong Kong’s New Regulatory Regime: First of Many Steps
Recently, Joseph Chan Ho-lim, Undersecretary for Financial Services and the Treasury, said that the regulatory authority of the city, Hong Kong Monetary Authority (HKMA), seeks public comments and their involvement for the formulation of stablecoins regulations. This step comes in the wake of efforts to implement the regulatory framework in the region by the end of next year.
Meanwhile, in the US, regulatory authorities are taking aggressive steps to regulate crypto companies. Enforcement actions had ramped up after last year’s incidents shook the entire financial market. Lawmakers in the US have already released three draft bills on regulations for stablecoins.
The crypto community in Hong Kong is looking forward to clear regulations for the burgeoning digital asset class. A crypto regulatory system set up in the region on the first day of June according to which crypto exchanges would need to have licenses to operate. The recent regulation will capacitate exchange firms to let retail investors to trade in major cryptocurrencies.
5 Types Possible Regulatory Regimes
Based on existing laws and discussions across the world, the HKMA noted that 5 possible outcomes of such a consultation exercise are possible. These are No action; Opt-in/pilot regime; Risk based regime; Catch-all regime; and Blanked ban. Again, the approach differs from that of the US, where the regulatory environment is uncertain even for stablecoins.
Regulatory Approach of Hong Kong and China
Hong Kong’s new regulation is considered to be an achievement, and in direct contrast to China’s stance on cryptocurrencies. In 2021, China had banned crypto and related operations in the region. Hong Kong’s open-arms approach differs from that of the US and China.
Regulations specific to stablecoins might be next in Hong Kong. A discussion paper issued by HKMA in January last year which was about cryptocurrency and stablecoins.
In January 2023, the regulatory agency published the result of last year’s discussion paper. It concluded that HKMA would be taking a step toward stablecoin regulations but in a more secure and proper way. The regulation will safeguard the investors in the space while keeping the development in the space intact.
According to Hong Kong’s new licensing regime for exchanges, licensed exchanges will be able to serve retail customers from the second half of the year and will have to adhere to strict Anti-Money Laundering (AML) rules.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/06/13/hong-kong-now-looks-towards-stablecoin-regulations-in-the-region/