Hong Kong Doubles Down on Stablecoin, OTC Rules Promise

• Hong Kong's government is looking to usher in bills for stablecoin issuers and virtual asset over-the-counter services.
• In the past few months, the Financial Services and the Treasury Bureau has initiated two consultations related to the sector.

Hong Kong's government reiterated that it will proceed with putting in place legislation for stablecoins and virtual asset over-the-counter (OTC) services, an official said on Wednesday.

The statement follows December's introduction of a public consultation on the regulation of stablecoin issuers by the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA). Stablecoins are crypto tokens whose value is tied to another asset, such as gold or, frequently, the U.S. dollar. Earlier this month, the FSTB also initiated a consultation on proposals for a licensing regime for providers of OTC trading services.

"Subject to the consultation outcomes and progress of the preparatory work, the Government will submit bills on the above licensing regimes to the Legislative Council as soon as practicable," Secretary for Financial Services and the Treasury Christopher Hui said in a written reply to a question about regulating crypto trading.

The city, a special administrative region of China, is in line with the many jurisdictions around the world looking to sharpen their approach to the industry. It recently issued guidance for firms offering crypto custodial services and is exploring whether to approve a spot bitcoin exchange-traded fund (ETF), according to recent reports.