Hong Kong’s Financial Services and the Treasury Bureau (FSTB) announced its upcoming release of the stablecoin consultation report results. This move is part of the region’s effort to draft legislative proposals aimed at regulating stablecoin issuers. The consultation, which began in December, seeks to establish a clear regulatory framework for the stablecoin industry.

The FSTB and the Hong Kong Monetary Authority (HKMA), the de facto central bank, have proposed that all fiat-referenced stablecoin issuers be required to obtain a license from the HKMA. This proposal would ensure that only licensed stablecoin issuers, authorized institutions such as banks, licensed corporations, and licensed crypto trading platforms could sell fiat-referenced stablecoins to retail investors.

The forthcoming legislative proposal will include detailed rules for stablecoin issuers, covering aspects such as reserve management, stability mechanisms, redemption processes, and governance. The goal is to create a robust regulatory environment that ensures the stability and security of stablecoins issued in Hong Kong.

Vincent Chok, CEO of First Digital, issuer of the FDUSD stablecoin, stated in March that there is significant market demand for regulated stablecoins. He noted that many entities are preparing to apply for the Hong Kong stablecoin license once the regulatory framework is in place.

The stablecoin sandbox launched by Hong Kong in March has been a crucial step toward understanding and shaping future regulations for the industry. The sandbox allows regulators to engage with industry participants, gather feedback, and refine their approaches to stablecoin oversight.

The upcoming release of the consultation results marks an important step for Hong Kong in establishing rules for stablecoins. This aligns with global trends where financial authorities are increasingly focused on regulating digital assets to maintain financial stability and protect consumers.

The proposed legislation by the FSTB and the HKMA underscores Hong Kong’s ambition to become a leading hub for regulated digital assets. By setting clear rules for stablecoin issuers, Hong Kong aims to enhance the trustworthiness and reliability of its financial market. Feedback from industry stakeholders during the consultation will provide valuable insights to shape the final legislative proposal to be submitted to the Legislative Council.