Compiled by: Nona
The Hong Kong government's previously released "Policy Declaration on Virtual Asset Development in Hong Kong" and the implemented licensing system for trading platforms have laid a solid foundation for industry development. Today's focus on promoting the "Stablecoin Regulation Bill" aims to further regulate fiat stablecoin issuers, safeguarding user rights while also helping to internationalize the renminbi and develop Hong Kong's offshore financial business.
It is understood that the bill committee has held 6 meetings on the draft regulation, with the government fully listening to the opinions of committee members and the industry, and making corresponding revisions to the regulation. During the discussions, the industry proposed multiple suggestions, especially regarding the specification of stablecoin providers and sales targets. Some opinions suggested expanding the coverage of permitted providers to include stored value payment tool licensees, while others pointed out that allowing stored value payment tool licensees to sell fiat stablecoins would help promote their widespread application.
Today, Councilor Wu, as a member of the bill committee, also shared his views in the process of promoting the stablecoin bill:
1. From a National Development Perspective
Hong Kong's promotion of stablecoins helps high-quality globalization. With its unique "one country, two systems" advantage, virtual asset development can highlight the benefits of Hong Kong's distinctive system. As countries globally begin to actively promote stablecoin-related discussions and legislation, such developments clearly help internationalize local currencies.
The stablecoins in this draft regulation are based on fiat assets, and I believe different applying institutions will explore and consider various currencies as assets. Besides Hong Kong dollars or US dollars, I believe assets including offshore renminbi are also within the scope of discussion. Promoting this within a compliant structure will help the national strategy of renminbi internationalization. As an international financial center, Hong Kong's improvement of stablecoin regulation will help develop its offshore renminbi business hub, supporting renminbi internationalization and bringing enormous business opportunities.
2. From Hong Kong's Development Perspective
The legislation's passage will further consolidate its international financial center status and more actively accelerate becoming a Web3 international center. Hong Kong has inherent advantages in developing virtual assets and stablecoins, including a robust legal foundation, free capital flow, international environment, and world-class talent. With Hong Kong backed by the world's second-largest economy, I believe it will help Hong Kong's economy develop rapidly again in the context of gradually increasing stablecoin application and usage.
Hong Kong has actively developed Web3 in recent years, showing some effectiveness, but is still in its early stages due to insufficient liquidity and overly strict regulation. To gain a leading global position, it must accelerate, seize opportunities, and have the courage to lead.
3. Expectations for the Future
I hope the SAR government strengthens communication with the industry to jointly promote stablecoin application scenarios and ecosystem. I believe legislation is just the most basic first step, a beginning. The focus is on future application coverage, scenario diversification, international recognition, potential reserve status, and global stablecoin transaction volumes. Gradually promoting stablecoin usage in combining physical and digital economies will help highlight Hong Kong's compliant stablecoin advantages.
Hong Kong has always had massive total commodity trade volumes, such as 94,645 billion Hong Kong dollars in global commodity trade in 2024. Stablecoins' characteristics can innovatively solve traditional financial system pain points, accelerating trade transfers and transactions. The government and industry should work together to implement related industries and application scenarios, applying regulatory technology (reg-tech) to ensure stable, safe, and gradually widespread use.
Moreover, I look forward to the SAR government further improving product market attributes in stages based on actual market and industry needs after introducing relevant legislation. Many global industry professionals have suggested increasing stablecoin attractiveness and bidirectional circulation, including on-chain interest. Stablecoin issuers could invest fiat reserve assets in extremely low-risk projects like sovereign national bonds. These interest earnings could potentially be directly distributed to stablecoin holders in the future, increasing holder returns and significantly benefiting future stablecoin applications, motivating global users to use Hong Kong's compliant stablecoins.
Additionally, I hope the government further improves regulatory measures for virtual asset over-the-counter trading services and the licensing system for virtual asset custody service providers, quickly launching the second round of consultation and related legislative procedures to continuously optimize Hong Kong's virtual asset regulatory framework, intensify investor protection, and promote sustainable development of Hong Kong's virtual asset ecosystem.
Simultaneously, the government and industry must pay attention to associated risks, especially past virtual asset fraud cases in Hong Kong involving billions in losses. Besides strengthening regulation and educational promotion, I hope mass media will also publicize more, helping citizens better understand virtual assets, recognize investment risks, and carefully choose licensed trading platforms.
I believe that if authorities continuously improve the legal framework, moderately remove industry barriers, and promote Web3 and virtual asset industry development under controllable risks, it will undoubtedly help consolidate Hong Kong's international financial center status and take a significant leap in becoming an international innovation and technology center.
