The HKMA plans to supervise the governance, issuance and stabilization of fiat-backed stablecoins, for which issuers must maintain reserves matching the amount of the crypto in circulation.<\/p>\n\n\n\n
Stablecoin reserves have come under heavy scrutiny around the world since 2021, when the issuer of the top stablecoin by market capitalization, Tether, showed much of its reserves were made up of unsecured short-term debt.<\/p>\n\n\n\n
\u201cThe value of the reserve assets of a stablecoin arrangement should meet the value of the outstanding stablecoins at all times,\u201d the report<\/u><\/a> said. \u201cThe reserve assets should be of high quality and high liquidity. Stablecoins that derive their value based on arbitrage or algorithm will not be accepted.\u201d<\/p>\n\n\n\n \u201cIn drawing up the specific regulatory arrangements, the HKMA will consider the feedback received, latest market development and international discussion. We will also engage with stakeholders and market participants. We expect to implement the regulatory arrangements in 2023\/24,\u201d HKMA Chief Executive Eddie Yue said in a press statement<\/u><\/a>.<\/p>\n\n\n\n \u201cOn the whole, the respondents were supportive of regulating stablecoins with a risk-based and agile approach,\u201d the statement said. \u201cThe respondents also broadly supported the need to take into account the latest market developments and draw reference from the discussion of international regulatory bodies when developing the relevant regulatory regime.\u201d<\/p>\n\n\n\n Industry Reactions<\/p>\n\n\n\n Founder and CEO of crypto firm Coinstreet, Samson Lee<\/u><\/a> commented, “Stablecoin is going to be the most common form of ‘Medium of Exchange’ for Web3 transactions. Regulation is the only option to facilitate such growth in a healthy environment protecting interests for all stakeholders.”<\/p>\n\n\n\n \u201cWith this framework, we are moving toward the right direction of have a regulatory sandbox which we have waited for a long time,\u201d said Agost Makszin<\/u><\/a>, MD and co-founder of Lendary Asia Capital, a German-headquartered asset management firm that set up it’s Asia arm in Hong Kong in 2020.<\/p>\n\n\n\n Makszin was also glad that he didn’t make the move to Singapore or elsewhere as some of the crypto-focused operators have done in the past two years. “Given our positive return and track record in 2022, we are in a good position to grow and scale in 2023 with a clear regulatory framework,” he said.<\/p>\n\n\n\n Some have reservations in terms of implementation of the new regime, however.<\/p>\n\n\n\n![\"\"](\"https:\/\/nftmetta.com\/wp-content\/uploads\/2023\/02\/Samson-Lee.jpg\")
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