Hong Kong Monetary Authority (HKMA) released Guide Tuesday to StableCOin licenses that outlined strict capital, reserve, governance and technology standards for issuers seeking to operate in the city’s regulated digitally active market.
The guidance also covered rules on money laundering and transitional measures for issuers of existing stablecoins. Stableecoins are digital assets that are tied to other assets such as Fiat currency.
HKMA’s stableecoin regime is set to take effect on Friday, and a bill on rules for the sector was adopted in May. Already 40 companies are waiting to apply for a stableecoin license, although the regulator is reportedly expected to approve less than 10 applications originally. HKMA CEO Eddie Yue last week warned companies not to be too excited about the upcoming regulatory regime, especially if their business is not related to stablecoins.
The regulator wants to take a cautious approach as described in his consultation conclusions on money laundering. Issuers must not yet prove that they can effectively mitigate against money laundering, HKMA said in his paper.
Unless a stableecoin issuer that is licensed can prove that it can effectively mitigate risks of money laundering, it must verify the identity of any stableecoin holder “, even if the proprietor has no customer relationship with the licensee,” says the HKMA Consultation Responsibility Document. The document also outlined that monitored virtual asset service providers or a reliable third party can also verify the identity of its stableco holders.
Hong Kong also has a licensing regime for cryptic companies and began to award licenses last year.
“HKMA will continue to evaluate the efficiency and appropriateness of such measures that, among other things, consider the evolving regulatory landscape,” the regulator said in his Tuesday consultation response.
StableCOin issuers who are fully prepared should apply in late September, says the HKMA press release.
A realistic timeline to start awarding licenses is early next year, Darryl Chan Wai-Man, Deputy CEO of HKMA, told South China Morning Post on Tuesday and talked about the region’s stablecoins regime.
Parts of this article were generated with the help of AI tools and reviewed by our editorial team to ensure accuracy and compliance with our standards. For more information, see Coindesk’s full AI policy.
Update and Correction (July 29, 18:21 UTC): Adds details everywhere from the guidelines and context from the South China Morning Post at the bottom. Also corrects the story to say that HKMA wants companies that are fully prepared to apply in late September, an earlier version said late August.
