Hong Kong Pushes Stablecoin Bill Through Legislative Council
Hong Kong’s proposed Stablecoins Bill is making progress in its path toward becoming law, with the Legislative Council now conducting its first reading. The bill aims to establish a comprehensive regulatory framework for stablecoins, including licensing requirements for issuers, marketing restrictions, and enhanced consumer protections.
The bill was first published in the region’s Gazette on December 6 and formally submitted to the Legislative Council for review on December 18. It must pass three readings in the council, involving debates, examinations, and potential amendments, before being forwarded to the chief executive for final approval.
Key Provisions of the Stablecoins Bill
The Stablecoins Bill, as outlined by law firm King & Wood Mallesons, has three primary components:
- Licensing for Stablecoin Issuers
Issuers must secure a license from the Hong Kong Monetary Authority (HKMA), the region’s central bank. This involves meeting stringent requirements related to governance, financial resources, reserve assets, and mechanisms to stabilize the value of their stablecoins. - Offering and Marketing Restrictions
Only licensed and regulated entities will be permitted to issue or promote stablecoins in Hong Kong. These measures are designed to prevent unregulated operators from entering the market and to ensure transparency and accountability. - Enhanced Consumer Protections
The bill includes safeguards to protect consumers, focusing on all market participants, including issuers and distributors, to foster trust and security in the stablecoin ecosystem.
Regional Impact and Comparison
Hong Kong’s move mirrors regulatory trends in Europe, where the implementation of the Markets in Crypto-Assets (MiCA) framework has reshaped the stablecoin landscape. MiCA-compliant issuers like Circle and Societe Generale have flourished, capturing 91% of the European market by late 2024. Similar transformations are expected in Hong Kong, with the bill providing a clear structure for stablecoin operations while attracting institutional players.
What’s Next?
As the Legislative Council continues to review the Stablecoins Bill, market participants are closely watching for any amendments or additional requirements. Once the bill passes the third reading, it will be submitted to the region’s chief executive for final approval and enactment into law.
The bill reflects Hong Kong’s ambition to position itself as a global hub for cryptocurrency innovation while ensuring financial stability and consumer protection in a rapidly evolving digital asset space.
Featured image from: ckgbs.com