Hong Kong has launched a sandbox agreement for stablecoin issuers to establish regulations for future operations.
This move is in line with the goal of becoming a key regional player in the cryptocurrency sector. The Hong Kong Monetary Authority (HKMA) has introduced a sandbox to set supervisory standards for companies interested in issuing fiat-referenced stablecoins in Hong Kong.
Following a consultation period that ended on February 29 regarding stablecoin regulation, the HKMA, Financial Services and Treasury Department in December had already proposed mandatory licensing for all issuers of stablecoins referencing fiat.
Eddie Yue, CEO of HKMA, emphasized that the sandbox will contribute to fostering dialogue between HKMA and industry stakeholders to develop appropriate, risk-based regulatory requirements. This approach is essential for the stable and responsible expansion of the stablecoin issuance sector.
Sandbox applicants must present a viable business plan and ensure that operations are manageable and limited in scope.
“We know there is very good demand. It’s still a very small market. There is a lot of room for growth, not just for us. But I think there are a lot of new stablecoins coming to the market soon,” said Vincent Chok, CEO of First. Digital, the issuer of the FDUSD stablecoin. “I know there are many people lining up to apply for this Hong Kong stablecoin license.”