Let's get straight to the point: Hong Kong's stablecoin legislation is about to be released. This article explains in detail the issuer regulatory system and sandbox arrangements.

Author: Xiao飒Lawyer

In July 2024, the Hong Kong Treasury Bureau released the "Consultation Summary on Legislative Proposals for Implementing a Regulatory System for Stablecoin Issuers in Hong Kong", which clarified the value of anchoring legal currency The importance of stablecoins in the ecology of Web3 and crypto-asset industries has also been released on the sandbox list (our e-commerce friend Moudong is among them, and he is really doing big things quietly). It can be seen that the Hong Kong government is aware of the risks of crypto assets and the mutually reinforcing and symbiotic relationship with the traditional financial system and capital market.

Today, Sister Sa’s team will explain in one article Hong Kong’s current regulatory measures on stablecoins, and help partners understand how to use the correct posture to get on the financial express of Hong Kong’s stablecoins.

01 Detailed explanation of the current regulatory measures proposed for stablecoins in Hong Kong

According to the definition of the Hong Kong Monetary Authority, A stablecoin is a currency that aims to maintain a relatively stable value relative to certain assets (usually currencies) virtual assets . The Hong Kong Monetary Authority is developing a regulatory regime for stablecoin issuers in Hong Kong due to the increasing interconnectedness between the traditional financial system and the virtual asset market.

1 Regulation of Stablecoin Issuers

Hong Kong has not yet passed legislation to regulate stablecoins, but subsequent legislative ideas are likely Will Generally consistent with previous consultation documents, we refer to the "Legislative Proposals for the Implementation of the Supervision System for Stablecoin Issuers" issued by the Hong Kong Treasury Bureau (FSTB) and the Monetary Authority (HKMA) in December 2023 to give you a brief interpretation of Hong Kong's regulations on The regulatory measures to be taken by stablecoin issuers and the conditions for applying to become a stablecoin issuer.

1. Licensed supervision

Hong Kong’s regulatory measures for the issuance of stablecoins follow the licensing supervision model of traditional financial institutions: all eligible issuers of legal currency stablecoins must obtain a license issued by the Monetary Authority, in other words, Only licensed institutions can issue stablecoins. In addition, judging from the consultation document, there may be two types of licenses for issuing stable coins in Hong Kong (or one type of license with different scope of permission, commonly known as "big and small licenses"). The information document makes it clear: (1) Only licensed institutions can provide the public with services to purchase fiat currency stablecoins; (2) Only fiat currency stablecoins issued by licensed stablecoin issuers can be sold to ordinary investors. In the future, some “currency dealers” may only have administrative licenses to “sell” fiat stablecoins.

In addition, the consultation document is also clear that an appropriate "transition period" will be given so that existing stablecoin issuers and currency dealers can adapt to the new regulatory requirements. Referring to the transition period requirements for crypto asset platforms issued by the Hong Kong Securities and Futures Commission last year in the "VATP License Manual and Transitional Arrangements for Licensing System Circular", we estimate that the transition period left for stablecoin issuers and currency dealers will also be approximately 12 months. about. Note that to enjoy the stability of the transition period, issuers and currency dealers will most likely need to meet the condition of "operating a real business and having a real business base". Refer to the VATP transition period arrangement, "real business" and "real business" Considerations for "business base" include: whether there is a legal entity in Hong Kong; whether there is a Hong Kong office; whether the entity is managed and controlled by Hong Kong employees; whether key personnel are permanently stationed in Hong Kong; whether there are independent customers in Hong Kong and real trading volume, etc.

2. Requirements for applying for a stablecoin issuer license

We first need to make it clear that the Hong Kong government does not have strict requirements for entities that can apply for a license. Basically "all qualified entities can apply for a license", but whether Being able to obtain a license depends on the specific business and compliance of the platform. In short, in the emerging industry of crypto assets, what the Hong Kong government values ​​is not “who you are” but “what you want to do”.

According to the consultation document, the Hong Kong government has put forward the following compliance requirements for entities that issue stablecoins:

3. Other matters

The consultation document makes it clear that the stablecoin issuance license is a continuously valid license. In other words, once the license is issued, it will remain valid unless it is revoked. In terms of business development, the current consultation document believes that from the perspective of risk control, licensed stablecoin issuers can provide stablecoin purchase services in Hong Kong, and does not emphasize that they must sell to professional investors. This means that the stable currency issued by licensed institutions There is a high probability that the coins can be sold to the general public.

02 Stablecoin SandboxHow to play?

On March 12, 2024, the Hong Kong Monetary Authority released the "Hong Kong Stablecoin Sandbox Arrangement" and officially launched the Hong Kong stablecoin regulatory sandbox system. According to information from the Hong Kong Monetary Authority, the purpose of establishing the "sandbox" is to test the business processes of stablecoin issuers and evaluate how they can conduct stablecoin business in Hong Kong compliantly and sustainably. Therefore, applicants entering the “sandbox” need to demonstrate detailed and feasible business and “sandbox” plans.

1 How to apply to join the stablecoin sandbox?

At present, there is only one application channel (relative to old school): express your intention to join the stablecoin regulatory sandbox to the HKMA through the official email of the HKMA: stablecoin_sandbox@hk ma.gov.hk , and wait for contact from the Hong Kong Monetary Authority, which may also request more information from the applicant. The time it takes for the HKMA to process an application is uncertain and depends on the complexity of the applicant's own business model, the adequacy and quality of the data provided by the applicant, and the speed and thoroughness of the applicant's response to the HKMA's follow-up questions and requirements.

Currently, the following three main factors are considered when evaluating applications:

1. Whether the applicant can demonstrate a true intention and reasonable plan to issue legal stablecoins in Hong Kong.

2. Can the applicant show specific plans to participate in the "Sandbox".

3. Can the applicant give reasonable expectations of compliance with the proposed regulatory requirements.

2 boxed There are three independent or joint entities. Among them, Moudong, the e-commerce giant in mainland China that we are very familiar with, is also listed among them. The remaining two are also extremely powerful.

According to the news learned by Sister Sister’s team, some East has put on the agenda the issuance of a cryptocurrency stablecoin in Hong Kong that is linked to the Hong Kong dollar at a ratio of 1:1. The tentative name is “Some East Stable Coin” "Coin", technically speaking, this is a cryptocurrency issued based on the public chain. The price is linked to the Hong Kong dollar (HKD) 1:1. The underlying assets have not been disclosed yet, but according to a certain East Coin Chain technology company, the underlying The assets are composed of highly liquid and credible assets, securely stored in separate accounts at licensed financial institutions, and the integrity of the reserves can be rigorously verified through regular disclosure and audit reports. Upon inquiry, the currency issuance entity Dongbi Chain Technology has obtained licenses No. 1 (securities trading), No. 4 (providing advice on securities) and No. 9 (asset management) issued by the Hong Kong Securities Regulatory Commission.

3 沙盒不等於已經被持牌

以某東為例，如果穩定幣發牌制度完善後，某東發行穩定幣的沙盒測試結果較好，（穩定度高、合規性好，能夠創造大量經濟價值）那麼某東依然需要向監管機構申請牌照，但可以將沙盒測試的結果直接作為申請持牌機構的依據，極大增加獲發牌的機率。從這個角度來說，進入沙盒就等於在香港穩定幣的大潮中佔據了先機。

寫在最後

了解香港金融制度的伙伴們都知道，自1983 年開始，香港金融管理局就規定了港幣與美元掛鉤的“聯繫匯率制度”，貨幣發行權下放至匯豐、中銀、渣打三家發鈔行，發鈔行每發行7.8港元的鈔票，就要向金管局上繳1美元，領取負債證明書後，才能開始印鈔）當發鈔行要收回鈔票的時候，要拿出負債證明向金管局兌換美元，然後從市場手中換回港元。但是，雖然三家銀行都有貨幣發行權，但是卻沒有“鑄幣權”，三家銀行只是把設計好的鈔票樣式和發行貨幣的數量交給香港印鈔公司，再由香港印鈔公司統一發行。這也是為什麼除 10 元港幣外，其他港幣都會印上「憑票即付」4個字，這意味著，發鈔行發行的港幣實質上是一中「兌換券」。

不少夥伴們此時應該能夠意識到，香港的傳統金融體系實際上與穩定幣的發行邏輯具有多個相似之處

，要把穩定幣視為一種法幣「兌換券」也不是不行。因此，颯姐團隊認為，香港對於穩定幣的監管天生有著領先優勢，這也意味著，法定貨幣穩定幣在香港的發行阻力較小。用歷史的眼光來看，拿下法定貨幣穩定幣的發行執照，對於任何主體而言都很可能意味著下一個百年的持續繁榮。

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