Source: Shanghai Securities Journal
Author: Huang Bingyu
On July 23, Yu Weiwen, the president of the Hong Kong Monetary Authority, published an article discussing stablecoins again. Yu Weiwen stated that the intensity of discussions about stablecoins in the market and society over the past month still needs to be strengthened, and discussed how to implement the stablecoin regulations according to prudent and sustainable principles.
Yu Weiwen stated that it is necessary to prevent excessive speculation by the market and public opinion regarding stablecoins. Recently, there are several phenomena worth noting. First is the excessive conceptualization. Yu Weiwen revealed that, based on Hong Kong's experience, dozens of institutions have actively approached the Monetary Authority team, with some explicitly expressing their intention to apply for stablecoin licenses, while others are in an exploratory stage. However, many remain at the conceptual stage, such as proposing to enhance cross-border payment efficiency, support Web 3.0 development, and improve foreign exchange market efficiency, but lack practical application scenarios and cannot propose feasible specific plans and implementation strategies, let alone possess the awareness and ability to manage risks. Some institutions that can provide application scenarios lack the technology and experience to issue stablecoins and manage various financial risks. Yu Weiwen suggested that there can be multiple models for participating in stablecoins, and for such institutions, a more practical approach seems to be collaborating with other stablecoin issuing institutions to provide application scenarios rather than pursuing the role of an issuing entity.
Another trend worth noting is the bubble trend. Yu Weiwen noted that recently, with the heated speculation of stablecoin concepts, the market has shown excessive excitement. Some listed companies, regardless of whether their main business is related to stablecoins or digital assets, see their stock prices rise and trading volumes increase significantly as long as they declare their intention to develop stablecoin businesses, and their company profiles are greatly enhanced.
Yu Weiwen reiterated that the Hong Kong Monetary Authority had previously made it clear that only a few stablecoin licenses would be issued in the initial stage and advised investors to remain calm and think independently when digesting the so-called 'positive' news from the market.
Yu Weiwen stated that after the (stablecoin regulations) are passed, the Hong Kong Monetary Authority will immediately implement the regulatory and anti-money laundering guidelines, seeking market opinions on both. They are currently adjusting the requirements of the guidelines based on feedback, aiming to publish by the end of July. It is expected that the final version will not have significant adjustments compared to the consultation draft, and given the common concerns of international regulators, stricter requirements will be established in terms of anti-money laundering to minimize the risk of stablecoins becoming tools for money laundering, ensuring the orderly and healthy development of Hong Kong's stablecoin market.
In addition, Yu Weiwen stated that a summary of the 'Stablecoin Issuer Licensing System' will be announced next week, and the document will outline the arrangements for the Hong Kong Monetary Authority to accept and process license applications.
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