- The regulation as per experts is more stringent than Singapore’s.
- The most current plan was detailed in a recently released consultation document.
As a move toward becoming a center for virtual assets, Hong Kong has suggested strict restrictions for stablecoins. But the new change might make things tough for widely used stablecoins. Tether (USDT) and USD Coin (USDC), according to experts, might be in jeopardy since the regulation is more stringent than Singapore’s.
The South China Morning Post cites Chainalysis’s Head of APAC Policy, Chengyi Ong, who claims that Singapore’s regulations are more lenient on stablecoins than the one proposed by Hong Kong.
Extremely Challenging
She supported her assertion by pointing out that the new framework mandates a minimum paid-up capital of $3.2 million (HK$25 million) for enterprises seeking licencing. Hong Kong’s aim to “set a high bar for fiat-referenced stablecoins (FRS)” is emphasized by the policy, as pointed out by Ong.
The most current plan was detailed in a consultation document that was released in tandem by the FSTB and the Hong Kong Monetary Authority (HKMA). The goal of the framework is to make it more difficult for unlicensed businesses to sell stablecoins to retail investors in Hong Kong via the regulated market.
Ben Hammond, Office Managing Partner at Ashurst’s Hong Kong office stated:
“It will be extremely challenging to become licensed as an issuer of a fiat-referenced stablecoin under the proposed regime.”
According to Hammond, most issuers may not even be able to get the necessary licenses at this time. Tether and Circle, two prominent stablecoin issuers, may struggle to meet the requirements of the new rules in light of this.
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