The Hong Kong Financial Authority (HKMA) will implement a six-month transition period for its new currency stabilization framework, which will come into effect on Friday. According to local news media Radio Television Hong Kong Wednesday, HKMA will introduce a six-month transitional arrangement when the new framework enters into force and will issue temporary permits to issuers who are able to comply with regulatory requirements.
If the issuer fails to comply with the new regulations within three months, the operation will have to end within four months. The report states that for the issuers that HKMA considers unable to comply with the new regulations, they will be required to cease operations within one month of receiving notification.
HKMA indicated that the first licences would be issued at an undisclosed time, but stressed that only a limited number would be granted initially and that the name of the applicant would not be published.
Details and requirements of the new regulations
The new regulations include strict qualification requirements for the issuer of a stable currency, such as the need for full support of a high-quality mobile reserve, foreclosure requests to be processed within a working day, and the physical presence in Hong Kong. In addition, issuers need to have adequate financial resources.
Other provisions include knowledge of your customer procedures, authorization of wallet ownership, ongoing transaction monitoring and blacklisting of high-risk wallet addresses. HKMA has the power to investigate suspected violations and may take enforcement actions such as fines, public warnings, revocation or suspension of licences, and may even refer cases to law enforcement.
Who's competing for a permit?
Prior to the introduction of the new regulations, interest in the issuance of the stabilization currency had increased. It was reported that a few days before the entry into force of the Hong Kong Stable Currency Regulation, China ' s electric power giant, Kyodong, had registered entities associated with the introduction of a potential Stable Currency. As a company often known as “Amazon, China”, Kyoto has registered two related entities through its subsidiaries and is one of the participants in the Hong Kong stabilization currency issuer's sandbox programme.
Similarly, ants International plans to apply for a license to issue stable currency in Hong Kong and Singapore. The Ant Group, which is part of the Ali Baba Group in China, has the largest digital payment platform in the world, serving more than 80 million businesses and 1.3 billion users.
In February this year, the Bank of Slag Chartered Hong Kong, Animoca Brands and Hong Kong Telecommunications announced a joint venture to issue a stabilization currency supported by the Hong Kong dollar.