Hong Kong Monetary Authority, terraUSD like algorithmic stablecoins He said it would not be considered under the planned regulatory system.
Hong Kong Will Ask For Licenses For Stablecoins
Hong Kong will require mandatory licenses for stablecoin issuers and will not allow algorithmic stablecoins, its top financial regulator said today.
Organizations operating regulated in Hong Kong will need to obtain a license to operate stablecoin services.
The Hong Kong Monetary Authority (HKMA) revealed its regulatory plans after receiving feedback on a discussion paper released last year.
The regulator said that based on the 58 responses it received, it would set up a system to oversee stablecoins, which are cryptocurrencies whose value is pegged to other assets.
To begin with, the HKMA cryptocurrency It plans to oversee the management, issuance, and stabilization of fiat-backed stablecoins, which must hold reserves that match their amount.
Stablecoin reserves have come under intense regulatory scrutiny around the world since 2021, when Tether, the largest stablecoin issuer by market cap, announced that most of its reserves consisted of unsecured short-term debt.
Major economies such as the US, European Union, and Japan are also working on controls for stablecoin issuers.
“The value of the reserve assets of a stablecoin arrangement should always match the value of outstanding stablecoins,” the report said.
“Reserve assets must be of high quality and highly liquid. Stablecoins that derive their value based on arbitrage or algorithms will not be accepted.”
“The HKMA will take into account the feedback received, the latest market development and international discussions when drafting specific regulatory arrangements.
We will also engage with stakeholders and market participants. “We hope to implement regulatory regulations in 2023/24,” HKMA Chief Executive Eddie Yue said in a press release.
*Not investment advice.
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