Hong Kong's central banking institution, the Hong Kong Monetary Authority (HKMA), released a questionnaire to gauge public opinion on crypto asset and stablecoin regulations. The state-backed regulator intends to establish a regulatory framework by 2023-24.
HKMA's "Crypto Assets and Stablecoins Discussion Paper" highlights the explosive growth of the stablecoin market in terms of market capitalization since 2020 and the concurrent regulatory recommendations put forward by international regulators, including the Financial Action Task Force (FATF). ) of the United States, the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS).
According For the HKMA, the current size and trading activity of crypto assets may not pose an immediate threat to the stability of the global financial system from a systemic point of view. However, the discussion paper warned:
โThe growing exposure of institutional investors to such assets as an alternative to or to complement traditional asset classes for trading, lending and borrowing [...] indicate a growing interconnection with the main financial systemโ.
Based on the figure above, the HKMA document shows that the global market capitalization stood at around $150 billion as of December 2021, โrepresenting around 5% of the overall crypto asset market.โ The regulator has also shared a list of eight questions to seek policy-related recommendations citing five possible regulatory outcomes: no action, opt-in regime, risk-based regime, blanket regime, and blanket ban:
HKMA hopes that interested parties deliver their responses by March 31, 2022, and aims to "introduce the new regime no later than 2023/24".
In a final note, the regulator stated that payment-related stablecoins have a greater potential to be incorporated into the mainstream financial system or even day-to-day business and economic activities.
As a result, the HKMA is considering expanding the scope of the Payment Systems and Stored Value Facilities Ordinance (PSSVFO), a law that determines the legality of financial products.
Related: Hong Kong real estate giant leads a $90 million raise for crypto bank Sygnum
Complementing the local government's pro-crypto intentions, one of Hong Kong's largest real estate developers, Sun Hung Kai, invested $90 million in Sygnum, a Swiss bank dedicated to holding digital assets.
As Cointelegraph reported, the Series B funding round brings Sygnum's post-money valuation to $800 million, marking a tenfold increase in consolidated revenue from 2021.
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