Hong Kong Monetary Authority aims to oversee stablecoin reserves

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

HKMA published
a
discussion
paper
on
Wednesday
regarding
cryptocurrencies
and
stablecoins
in
which
it
provided
its
views
on
how
the
industry
should
be
regulated
in
Hong
Kong.

In
the
34-page
long
consultation
document,
the
HKMA

paid

special
attention
to
“payment-related
stablecoins,”
pointing
out
that
the
market
capitalization
of
all
stablecoins
hit
$150
billion
in
December,
accounting
for
5%
of
the
entire
crypto
market.
The
regulator
added
that
all
existing
stablecoins
are
“mostly
asset-linked
and
predominantly
pegged”
to
the
United
States
dollar,
including
stablecoins
like
Tether
(USDT)
and
USD
Coin
(USDC).

“The
rapid
development
of
crypto-assets,
particularly
stablecoins,
is
a
topic
of
keen
attention
in
the
international
regulatory
community
as
it
presents
possible
risks
regarding
monetary
and
financial
stability,”
HKMA
said.

To
effectively
handle
associated
risks,
HKMA
laid
out
eight
major
policy
directions,
proposing
to
become
a
single
regulator
to
supervise
entities
involved
in
both
regulating
and
running
operations
like
issuing
stablecoins
and
managing
their
reserves.
The
authority
also
wants
to
regulate
stablecoin
transactions’
validation
processes,
private
key
storage
management
and
executing
transactions.

“We
encourage
current
or
prospective
players
in
the
stablecoins
ecosystem
to
respond
to
this
paper
and
submit
relevant
views
to
us,
so
that
we
could
take
the
feedback
into
account
when
formulating
the
regulatory
framework,”
HKMA
wrote.
The
regulator
expects
to
finalize
its
next
steps
as
soon
as
possible
and
introduce
new
regulations
by
2023
or
2024.



Related:




Hong
Kong-based
Coinsuper
allegedly
blocks
customers’
withdrawals

HKMA
is
not
the
only
financial
regulator
concerned
about
stablecoin
risks
and
planning
steps
to
regulate
the
growing
industry.
In
November
2021,
the
U.S.
President’s
Working
Group
on
Financial
Markets

issued
a
report
on
possible
“stablecoin
runs”

and
“payment
system
risks.”
The
U.S.
Treasury
subsequently

hinted
at
new
stablecoin-focused
laws

in
December.

read original article here