The Stablecoin law in Hong Kong will take effect from August 1, 2025, opening a licensing channel for stablecoin issuers under a special process.

The licensing system will apply an invitation to submit applications instead of allowing organizations to register freely, with strict scrutiny from the Hong Kong Monetary Authority (HKMA) based on criteria regarding the capacity and practical application of stablecoins.

MAIN CONTENT

  • The Stablecoin law of Hong Kong will take effect from 1/8/2025, along with a new licensing process.

  • The licensing process is based on an invitation to submit applications, not allowing free registration.

  • Practical application is a key criterion in the assessment by the Hong Kong Monetary Authority.

When will the Hong Kong Stablecoin law take effect and what will its impact be?

This information was published by Caixin on 19/7/2024, confirming that the Stablecoin law in Hong Kong officially takes effect from 1/8/2025. The application of the law not only creates a control framework for stablecoins but also directly affects the cryptocurrency financial market in the region, helping to enhance transparency and protect users.

In the context of increasingly stringent legal frameworks globally, this action reflects Hong Kong's direction for strict control, prioritizing financial safety and minimizing market risks.

How is the stablecoin licensing mechanism implemented in Hong Kong?

According to sources from Caixin, the stablecoin licensing process does not allow issuers to freely download templates and submit applications like regular procedures. Instead, the HKMA will apply a selective invitation mechanism, directly communicating with candidates to verify their capacity and potential before allowing them to submit official applications.

"The invitation to submit applications mechanism helps the HKMA control the quality of applications; only those entities that meet the basic requirements will be licensed to issue stablecoins."

Mr. Louis Chan, cryptocurrency legal expert, 2024

This process ensures that qualified entities meet strict legal and technical conditions, while also avoiding widespread licensing that could pose risks to the market and users.

What important criteria does the Hong Kong Monetary Authority prioritize in approvals?

The practical application of stablecoins is recognized as a decisive factor in the eyes of regulators. They are particularly interested in the effectiveness of stablecoins in specific use cases, from payments to value preservation and integration into the financial ecosystem.

According to a confidential source, the HKMA is very cautious and sets high standards in approvals to only license potential projects, avoiding market disruption.

"We will focus on assessing specific use cases of stablecoins as this is the foundation to ensure long-term stability and sustainability."

Mr. Victor Li, R&D Director of a fintech company, 2024

What are the benefits and challenges of the invitation-based stablecoin licensing system in Hong Kong?

The application of the invitation to submit applications mechanism instead of accepting free applications helps better control the quality of stablecoin projects while enhancing transparency and reducing the risk of fraud and legal risks.

However, this may also create barriers to entry, reducing diversity and innovation in the stablecoin issuance field. Organizations need to prepare thoroughly in legal and technical aspects to meet the HKMA's strict standards.

Frequently Asked Questions

Does the Hong Kong Stablecoin law apply to all types of stablecoins?

The law mainly targets stablecoin issuers, especially those products with large market scales and used in financial transactions.

Which agency is responsible for licensing stablecoins in Hong Kong?

The Hong Kong Monetary Authority (HKMA) is the entity directly assessing and licensing the issuance of stablecoins.

Does the invitation-based application system help reduce risks for investors?

Indeed, thanks to the thorough screening process, the system helps eliminate entities that do not meet the standards, protecting users from untrustworthy projects.

Is it easy for new companies to obtain stablecoin licenses in Hong Kong?

The process is quite strict and requires deep preparation regarding capacity, so new companies need more time to meet the requirements.

When does the Stablecoin law start to apply?

The law will officially take effect from August 1, 2025, and will simultaneously begin licensing under the new process.

Source: https://tintucbitcoin.com/stablecoin-hong-kong-cap-phep-theo-moi/

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