The Legislative Council of Hong Kong has approved the stablecoin bill, paving the way for authorized issuers of fiat-backed stablecoins by the end of the year and positioning the region as a global Web3 hub.
The Legislative Council of Hong Kong has approved the Stablecoin Bill, paving the way for a regulated framework that could position the region as a global leader in digital assets and Web3 development.
In a post published on May 21 on X, Johnny Ng Kit-Chong, a member of the Legislative Council, stated that the bill had passed its third reading, clearing the last hurdle for its adoption.
"It is expected that by the end of this year major institutions will be able to apply to the Hong Kong Monetary Authority to become authorized issuers of stablecoins," Ng stated.
According to the new legislation in Hong Kong, stablecoins must be backed by fiat currencies as underlying assets. Ng stated that Hong Kong welcomes "international companies and institutions interested in issuing stablecoins to apply in Hong Kong," offering to personally assist with applications and collaboration.
I am also pleased to facilitate connections and collaborate with all stakeholders to advance the development of Web3 in Asia and globally, with Hong Kong at the center.
Hong Kong aspires to become a Web3 powerhouse.
Ng stated that the legislation marks the first step towards creating a Web3 infrastructure in Hong Kong. "The most crucial step is to develop more real-world applications."
Ng stated that the adoption of stablecoins has the potential to drive innovation in retail payments, cross-border trade, and peer-to-peer transactions.
He added that he encourages the development and adoption of stablecoins, as they "represent a significant financial innovation." Regarding improving market stability, Ng suggested distributing interest to stablecoin holders.
Interest for stablecoin holders
According to Ng, "providing interest will enhance the competitiveness of stablecoins." This increased competitiveness, he explained, incentivizes broader participation and expands the market share of stablecoins, supporting what he considers sustainable growth.
Ng's assertion that yield-bearing stablecoins are more competitive follows recent positive data. Research indicates that yield-bearing stablecoins have surged to USD 11 billion in circulation, representing 4.5% of the total stablecoin market, a strong rise from just USD 1.5 billion and a 1% market share at the beginning of 2024.
