Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA) is in the process of drafting a bill that could properly regulate stablecoin. HKMA is of the view that although stablecoin still poses a risk to financial stability it has the potential to be integrated in the financial markets.
In a research paper released by the HKMA, the central bank has been in the process of seeking public consultation on crypto regulation. The paper outlines HKMA’s thinking in enacting crypto rules. In the research paper, the HKMA underlined that it considers asset classes to pose an increasing risk to financial stability in the country due to rapid growth.
The HKMA stressed that stablecoin is becoming a hot topic so often talked about around the world and on that basis they proposed to introduce rules that can license and supervise stablecoin activities. The research paper adds that the proposed approach has taken into account international recommendations, markets and the regulatory landscape within the country and in other key jurisdictions including payment-related stablecoin characteristics.
The rapid development of cryptocurrency assets, particularly stablecoin, is a topic of serious attention in the international regulatory community as it can pose risks related to monetary and financial stability, HKMA Chief Executive Eddie Yue said in the statement.
But on the other hand, stablecoin has the potential to be a generally accepted means of making payments. -said the regulator. The announcement comes shortly after the central bank announced plans to issue its own digital currency, e-HKD, for retail use.
Most researchers tend to argue that stablecoin should be backed up against each other by fiat currencies.
