Hong Kong regulator canvasses views on guidelines for crypto belongings

HONG KONG : Hong Kong’s de facto central financial institution invited touch upon Wednesday about methods to manage crypto belongings and stablecoins, with the intention of adopting a regulatory framework by 2024 by which the coverage spectrum might vary from no motion to a blanket ban.

The fast development of cryptocurrencies and, specifically, stablecoins, or digital belongings pegged to conventional currencies, has drawn consideration from regulators worldwide, who concern they may put the monetary system in danger if not monitored.

The worldwide market worth of crypto belongings stands at about US$2.2 trillion, pointing to their rising inter-connectedness with the mainstream monetary system, stated Eddie Yue, the chief govt of the Hong Kong Financial Authority (HKMA).

“We place emphasis on points that will have an effect on the general public’s confidence in, and the protection, effectivity, and soundness of, our fee methods, and accord acceptable precedence to the safety of customers,” the HKMA stated in a paper on the subject.

It’s searching for suggestions from the general public and stakeholders by March 31, in a extra wide-ranging effort than a latest train by the territory’s Securities and Futures Fee (SFC) that centered solely on buying and selling platforms for digital belongings.

In its paper, the HKMA centered on the broader implications of stablecoins which may be utilized in funds, together with points of investor safety regarding crypto belongings, and controlled establishments’ interface with crypto belongings.

It listed 5 alternatives for regulating crypto belongings, starting from no motion to a blanket ban.

Regulated establishments are required to “critically consider” their exposures to various kinds of dangers and undertake risk-mitigation measures earlier than establishing ties with suppliers of crypto asset providers, the paper added.

The session comes towards the backdrop of issues amongst policymakers worldwide that crypto belongings might be used for illicit functions, or to make the most of unsuspecting customers.

Such worries stem from the complexity and volatility of cryptocurrencies, in addition to wildly various requirements round points of disclosure, reserves and shopper safety.

(Reporting by Selena Li; Modifying by Sumeet Chatterjee and Clarence Fernandez)

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