The Monetary Authority of Hong Kong (HKMA) published the orientation on Tuesday for the Stablecoin license, which describes strict capital, reserve, governance and technology standards for issuing issues that seek to operate in the city’s digital assets market.
The guide also covered rules on money laundering and transition measures for existing stable emitters. Stablecoins are digital assets that are linked to other assets such as the fiduciary currency.
The HKMA Stablecoin regime will enter into force on Friday and a bill on the rules for the sector in May was approved. 40 companies are waiting to request a Stablecoin license, although the regulator is expected to approve less than 10 applications initially. The HKMA CEO, Eddie Yue, last week warned companies that are not too excited about the next regulatory regime, particularly if your business is not related to Stablcoins.
The regulator wants to adopt a cautious approach as described in his consultation conclusions on money laundering. The emitters have not yet shown that they can effectively mitigate against money laundering, HKMA said in their article.
Unless a Stablecoin issuer who has a license can prove that he can effectively mitigate the risks of money laundering, he must verify the identity of each Stablcoin holder, “even if the holder does not have a relationship with the client with the licensee,” said the HKMA consultation response document. The document also described that supervised virtual asset services suppliers or a reliable third can also verify the identity of their Stablecoin holders.
Hong Kong also has a license regime for cryptographic companies and began granting licenses last year.
“The HKMA will continue to evaluate the effectiveness and suitability of such measures considering, among other things, the evolution regulatory panorama,” said the regulator in his consultation response on Tuesday.
Stablecoin emitters who are fully prepared must be applied at the end of September, according to HKMA press release.
A realistic schedule to start granting licenses is at the beginning of next year, Darryl Chan Wai-Man, HKMA executive deputy director, South China Morning Post, said Tuesday, speaking about the regime of Stablecoins in the region.
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Update and correction (July 29, 18:21 UTC): Add details from the guidelines and the context of South China Morning Post at the bottom. It also corrects the story to say that HKMA wants companies that are fully prepared to apply at the end of September, a previous version said at the end of August.
