The HKMA and the Treasury Bureau yesterday jointly published a consultation summary on the implementation of a regulatory system for issuers of fiat currency stablecoins in Hong Kong. Legislation will be implemented to introduce a licensing system. In the future, issuers must obtain a license from the HKMA before they can issue stablecoins and promote related businesses in Hong Kong. The authorities plan to submit a draft bill to the Legislative Council this year. The market is concerned about whether stablecoins such as Tether (USDT) and USDC, which are used to invest in virtual assets, can be sold in Hong Kong after the relevant laws come into effect.

Ho Hon-kit, assistant chief executive of the HKMA, said that if the law comes into effect in the future, issuers of overseas stablecoins such as USDT and USDC may consider whether to apply for a license in Hong Kong. If they apply for a license and are granted a license by the HKMA, they will be regulated stablecoins in Hong Kong and can be distributed to investors, including retail investors, according to the law.

Ho Hanjie pointed out that if such overseas stablecoin issuers do not come to Hong Kong to apply for a license, under the implementation of Hong Kong’s regulatory system, intermediaries including banks, licensed virtual asset service providers (VASPs), and future licensed stablecoin issuers, etc., will not be able to distribute unlicensed stablecoins in Hong Kong to retail investors, except for professional investors.

If retail investors go overseas to invest in stablecoins that are not licensed in Hong Kong in the future, Ho Hanjie said that retail investors bear the risks themselves, but the Hong Kong regulatory system does not encourage such practices.