Duncan Chiu, a member of the Legislative Council of the Hong Kong Special Administrative Region (HKSAR), revealed that the Hong Kong Parliament is currently conducting a second round of consultations regarding stablecoin regulations, with plans to unveil these regulatory conditions by mid-2024.
His remark was made during the 2023 Shanghai Blockchain International Week on September 19 and reported by a local media outlet. Hong Kong is undoubtedly one of the most dynamic crypto hubs in Asia and the world.
Chiu also shared his recommendations to the Hong Kong Chief Executive, which included exploring tokenization, digital Hong Kong dollars, and stablecoins, with the goal of establishing Hong Kong as a digital asset hub.
Hong Kong’s Stablecoin Regulatory Roadmap
In addition to Hong Kong’s regulatory agenda for stablecoins, the event participants discussed the dynamic world of Web3 and its implications for blockchain and cryptocurrencies.
Jiannong Cao, a Professor at Hong Kong Polytechnic University, illuminated the innovations flourishing within decentralized finance (DeFi), GameFi, and SocialFi, all grounded in Web3.0 principles. He also highlighted the emergence of Decentralized Autonomous Organizations (DAOs).
Ming Zeng, former Chief Strategy Officer of Alibaba Group, concluded the summit with insights into Web3’s future. He highlighted the role of AGI (Artificial General Intelligence) in reducing the threshold and cost of creation, thus forming a creator economy.
They emphasized the importance of infrastructure, applications, and the growth of the entire ecosystem in Web3’s development. He also noted that AI/crypto native services would emerge in the future, bringing new users and driving the development of the ecosystem.
The summit provided a platform for industry leaders to discuss the evolving landscape of Web3, blockchain, and cryptocurrency. The insights shared during the summit underscored the significance of these technologies in shaping the future of finance, governance, and innovation in Hong Kong.
Earlier this year, the Hong Kong Monetary Authority (HKMA) declared that algorithmic stablecoins would not be accepted. Instead, the HKMA has introduced stringent guidelines that require all stablecoin issuers to maintain a continuous and relevant backing of their stablecoin value with the underlying reserve asset.
Crucially, this new licensing requirement will be made mandatory for entities conducting operations within Hong Kong’s jurisdiction. Furthermore, it will extend to companies actively marketing their stablecoin products to the Hong Kong public.
Concerns regarding algorithmic stablecoins have mounted since the collapse of TerraUSD, an algorithmic stablecoin of the Terra ecosystem. The Luna-Terra saga wiped out billions of dollars in value and caused widespread panic among crypto investors. Many crypto exchanges and other businesses were forced to lay off employees or reduce costs to survive.
Hong Kong Takes the Lead in Crypto Adoption
Hong Kong is actively positioning itself as a major player in the cryptocurrency realm. In July, the Hong Kong Special Administrative Region government established a task force to advance Web3.0 technology.
In August, HashKey, the first cryptocurrency exchange to receive regulatory approval from the Securities and Futures Commission (SFC), launched its services to retail investors.
Deputy Minister for Financial Services and Treasury Joseph Chan Ho-lim emphasized the government’s proactive approach to fintech innovation and investor protection, highlighting Hong Kong’s strides in bridging the gap between cryptocurrency assets and traditional financial markets.
In the same month, Swiss crypto bank Seba received approval in principle from the SFC to establish a presence in Hong Kong. The AIP serves as the initial stage for Seba Hong Kong to secure a full license, allowing it to engage in transactions involving cryptocurrency-related products, virtual assets, and traditional securities.
These developments highlight Hong Kong’s growing recognition of digital assets as a significant component of the future financial landscape. With HashKey and Seba contributing to the transformation of Hong Kong into a dynamic cryptocurrency hub, the region is poised to remain at the forefront of global cryptocurrency expansion.
