Hong Kong Stablecoin Regulation Consultation Summary: Participants in the sandbox will be disclosed, issuers must maintain a 100% reserve, and providing interest to users is prohibited.

Wu learned that, according to Ming Pao, the Hong Kong Treasury and the Monetary Authority released yesterday a consultation summary on the legislative proposal for implementing a regulatory regime for fiat stablecoin issuers in Hong Kong. The Monetary Authority is currently processing 'sandbox' applications from stablecoin issuers and will announce the list of participants shortly. According to the consultation, most respondents support the requirement that the total value of reserve assets for fiat stablecoins must be fully reserved at all times. Additionally, the authorities still prefer maintaining the criterion of establishing a physical company in Hong Kong for licensing. The Monetary Authority also indicated that there is no prohibition on issuers offering promotional incentives, however, issuers are not allowed to arrange with third parties to provide interest to fiat stablecoin users.