Hong Kong Monetary Authority aims to oversee stablecoin reserves

Hong Kong’s cardinal bank, the Hong Kong Monetary Authority (HKMA), wants to supervise stablecoin issuance and reserves management.

HKMA published a treatment insubstantial connected Jan. 12 regarding cryptocurrencies and stablecoins, successful which it provided its views connected however the manufacture should beryllium regulated successful Hong Kong.

In the 34-page agelong consultation document, the HKMA paid peculiar attraction to “payment-related stablecoins,” pointing retired that the marketplace capitalization of each stablecoins deed $150 cardinal successful December, accounting for 5% of the full crypto market. The regulator added that each existing stablecoins are “mostly asset-linked and predominantly pegged” to the United States dollar, including stablecoins similar Tether (USDT) and USD Coin (USDC).

“The accelerated improvement of crypto-assets, peculiarly stablecoins, is simply a taxable of keen attraction successful the planetary regulatory assemblage arsenic it presents imaginable risks regarding monetary and fiscal stability,” HKMA said.

In bid to efficaciously grip associated risks, HKMA laid retired 8 large argumentation directions, proposing to go a azygous regulator to supervise entities progressive successful some regulating and moving operations similar issuing stablecoins and managing their reserves. The authorization besides wants to modulate stablecoin transactions’ validation processes, backstage cardinal retention absorption and executing transactions.

“We promote existent oregon prospective players successful the stablecoins ecosystem to respond to this insubstantial and taxable applicable views to us, truthful that we could instrumentality the feedback into relationship erstwhile formulating the regulatory framework,” HKMA wrote. The regulator expects to finalize its adjacent steps arsenic soon arsenic imaginable and present caller regulations by 2023 oregon 2024.

Related: Hong Kong-based Coinsuper allegedly blocks customers’ withdrawals

HKMA is not the lone fiscal regulator acrophobic astir stablecoin risks and readying steps to modulate the increasing industry. In November 2021, the U.S. President’s Working Group connected Financial Markets issued a study connected imaginable “stablecoin runs” and “payment strategy risks.” The U.S. Treasury subsequently hinted astatine caller stablecoin-focused laws successful December.