On 21 May, the Legislative Council of the HKSAR adopted the Stable Currency Bill.
The Government of the Hong Kong SAR stated that it would welcome the adoption by the LegCo of the Currency Stability Bill to establish in Hong Kong a system to stabilize the issuer of coins and to improve the regulatory framework for virtual asset activities in Hong Kong in order to maintain financial stability while promoting financial innovation.
With the implementation of the Virtual Asset Exchange Platform and the Stabilization Currency Issuer Control System, the HKSAR Government will also consult on virtual off-site transactions and hosting services and will issue a second development virtual asset policy declaration.
The Director-General of the Department of Finance and Treasury, Xu Jong-woo, stated that the stabilization currency regulations were based on the principle of “same activities, the same risks, the same controls” and were risk-based in an effort to create a sound regulatory environment. The introduction of the Stability Currency Regulation not only meets international regulatory requirements but also provides a stable basis for the virtual asset market in Hong Kong.
The stabilization currency regulation is expected to come into effect this year, giving industry sufficient time to understand the requirements under the licensing system. There are also transitional arrangements in the licensing system to enable parties to obtain licences and make appropriate business arrangements as required by the regulations.
Following the introduction of the SFI, any person who, in the course of his or her business, issues a SFI in Hong Kong or a SFI in Hong Kong or abroad claiming the value of an anchor dollar must obtain a licence. The applicant is required to meet capital adequacy (the minimum paid capital of HK$ 25 million) and to meet the requirements of reserve asset management (high liquid assets equivalent to the nominal value of the currency in circulation) and foreclosure (foreclosure without conditions).
They also require the proper segregation of customer assets, the maintenance of sound stabilization mechanisms, and the treatment, under reasonable conditions, of the demand of the holder of the stable currency on a nominal basis. At the same time, applicants are required to meet a range of requirements to combat money-laundering and terrorist financing?
In accordance with the relevant definition and scope of the Stable Currency Bill, the Stable Currency refers to encrypted protection of digital form values that meet the following characteristics:
(a) In the form of storage of unit of measure or economic value;
(b) Be or are to be used as a means of dealing accepted by the public for the purpose of payment, satisfaction of an obligation or investment for goods or services;
(c) May be transferred, stored or traded electronically;
(d) Operating on distributed ledgers or similar information repositories;
(e) Aim at maintaining a stable value by reference to a single asset or group or basket of assets.
Hong Kong ' s stable currency regulation system focuses on the stable currency linked to the French currency rather than on other types of stable currency (e.g., linked to gold or other assets). Hong Kong has clearly positioned the stable currency as a “payment tool” rather than a security instrument, promoting its application to scenarios such as payments, cross-border transfers and contributing to Web3 ecological development. It is worth noting that the Hong Kong Monetary Authority, in its earlier “digital Hong Kong dollar plus” project, explored synergistic innovations in monetization deposits and stabilization currency.
Over the past few years, there has been a global wave of stable currency. From Libra, launched on Facebook, to USDC in Circle, to Tether, which is under tight regulation, the stabilization currency is becoming an important part of the encrypted money market. Hong Kong ' s adoption of the Stabilisation Currency Bill marks a crucial step in the field of global virtual asset regulation, not only filling the regulatory gap of the French-currency linkage to a stable currency but also balancing financial innovation with risk prevention through clear rules.
Globally, the regulation of stable currencies is at an exploratory stage, and Hong Kong has taken the lead in completing its legislation, which has helped to curb the problems of money-laundering, fraud and other issues that were previously caused by the lack of regulation. Through legislation, Hong Kong has clearly established rules for the regulation of currency across borders, leaving room for mutual recognition with international regulation, and may also provide a model for other jurisdictions.
In summary, the adoption of the Hong Kong Currency Stability Ordinance is both a necessary response to virtual asset risk and a strategic approach to consolidating its international financial centre and its position as a global digital finance centre. By building a high standard regulatory framework, Hong Kong has not only increased market confidence and attracted global resources, but is more likely to lead international regulatory collaboration and technological innovation. In the future, the practical implementation of the Stability Pact, international recognition and inclusion of emerging technologies will determine whether Hong Kong can truly become a central hub in the stable currency ecology.