Hong Kong’s Monetary Authority (HKMA) released a discussion paper on crypto-asset and stablecoin regulation that will be implemented by 2024.
The rapid growth and adoption of cryptocurrencies require ruling, so it does not bring the financial system at risk, HKMA wrote. The regulation will help to improve Hong Kong’s financial stability.
“We place emphasis on issues that may affect the public’s confidence in, and the safety, efficiency, and soundness of, our payment systems, and accord appropriate priority to the protection of users,”
the document stated.
The paper said that stablecoins are already being developed for store value and everyday payments, “thus having a higher potential for being incorporated into the mainstream financial system across the globe.”
The development of non-payment-related digital assets will be closely monitored due to uncertainties concerning cryptocurrency.
HKMA encourages taking a risk-based approach when talking about payment-related stablecoins. The authority listed several risks concerning cryptocurrency, including financial and monetary instability, settlement issues, user protection risks, financial crime, international compliance, and regulatory arbitrage.
“Bringing crypto-assets within the regulatory perimeter in an appropriate manner would help address the various risks posed to users and the financial system while embracing the potential benefit of financial innovations. Many regulators around the world have begun the work. The HKMA is of the view that adopting a risk-based approach would be the most suitable way to take things forward,”
HKMA concluded in the paper.