Hong Kong Treasury Department: Stablecoin issuers must comply with three main requirements: full reserves, redemption services, and governance

The Hong Kong Treasury Department stated that, given the important role of fiat stablecoins in the Web3 and virtual asset ecosystems, as well as the increasingly close connection between the traditional financial system and the virtual asset market, the SAR government needs to establish a regulatory system for fiat stablecoin issuers to conduct risk-based and pragmatic supervision. The three main requirements include reserve management and stability mechanisms (such as requiring issuers to ensure that fiat stablecoins are fully supported by high-quality and highly liquid reserve assets), redemption requirements, and regulatory requirements for governance, knowledge, and experience.

The Hong Kong Treasury Department also suggested that only fiat stablecoin issuers, banks, licensed corporations, and licensed virtual asset trading platforms that have been issued licenses can sell fiat stablecoins in Hong Kong or actively promote related services to the Hong Kong public. For existing stablecoin issuers, the proposed regulatory system will also have corresponding transitional arrangements. The Treasury Department also expects that a regulatory system for fiat stablecoin issuers that is appropriate and in line with international regulatory recommendations can provide sufficient protection for users, address potential risks to currency and financial stability, and enable the sustainable and responsible development of Hong Kong's virtual asset ecosystem.