Overview of Stablecoins in Hong Kong
In a recent radio interview, Paul Hui, Hong Kong’s Treasury Secretary, emphasized the legal status of stablecoins, designating them as legal tender. These digital currencies are poised to play a future role in transactions, facilitated by blockchain technology among others.
Regulatory Framework and Supervision
Hui clarified that stablecoin issuers operate under the supervision of the Hong Kong Monetary Authority, adhering to regulatory frameworks akin to those governing traditional financial assets. Issuers are mandated to manage reserve assets judiciously, ensuring customer funds are properly segregated.
Redemption and User Assurance
Hui specified that when holders of stablecoins request redemption, their requests should be fulfilled within a single business day.
Implications for the Belt and Road Initiative
Additionally, Xu Zhengyu highlighted the advantages of stablecoins in regions involved in the Belt and Road Initiative, particularly where local currencies may be unstable or financial systems underdeveloped. In such scenarios, stablecoins present a less risky alternative for conducting payments, mitigating the potential impact of currency fluctuations.
