The Hong Kong Monetary Authority (HKMA), the central bank of Hong Kong, has announced that it will conduct a survey to gain public opinion on the regulation of cryptocurrencies and stable coins. It intends to establish regulations by 2023-24.
HKMA’s “Discussion Paper on Virtual Currencies and Stable Coins” states that the stable coin market has grown explosively by market value since 2020, and the US Financial Activities Working Group (FATF) and Financial Stability Board (FSB). He emphasized that international regulators such as the Basel Committee on Banking Supervision (BCBS) are also issuing regulatory recommendations.
According to the Hong Kong Department of CommerceThe current size and trading activity of cryptocurrencies does not immediately threaten the stability of the global financial system. However, the discussion paper has issued a warning.
“Institutional investors’ increasing exposure to such assets as an alternative or complement to traditional asset classes for trading, lending and borrowing is becoming more interconnected with the mainstream financial system. It is shown that”
Based on the above figure, HKMA’s paper points out that the world market capitalization reached about 150 billion dollars in December 2021 and “it is equivalent to about 5% of the entire cryptocurrency market”. Regulators also shared a list of eight questions seeking policy-related recommendations, citing five regulations (no action, opt-in regime, risk-based regime, catch-all regime, and ban on inclusion).
The deadline for HKMA is March 31, 2022, and the goal is to “introduce a new system by 2023/24 at the latest.”
Regulators say that payment-related stablecoin is likely to be incorporated into mainstream financial systems or day-to-day commercial and economic activities.
Therefore, HKMA is considering expanding the scope of the “Payment Systems and Stored Value Facilities Ordinance (PSSVFO)” law that determines the legality of financial products.
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