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The Hong Kong Monetary Authority shared a list of eight questions to seek policy-related recommendations citing five possible regulatory outcomes â no action, opt-in regime, risk-based regime, catch-all regime and blanket ban.
Hong Kong's central banking institution, the Hong Kong Monetary Authority (HKMA), released a questionnaire to gauge public opinion on regulations for crypto-assets and stablecoins. The state-backed regulator intends to establish a regulatory framework by 2023-24.
HKMAâs âDiscussion Paper on Crypto-assets and Stablecoinsâ highlights the explosive growth of the stablecoin market in terms of market capitalization since 2020 and the concurrent regulatory recommendations put forth by international regulators including the United Statesâ Financial Action Task Force (FATF), the Financial Stability Board (FSB) and The Basel Committee on Banking Supervision (BCBS).
Market Capitalization of Crypto-assets. Source: HKMA
According to the HKMA, the current size and trading activity of crypto-assets may not pose an immediate threat to the stability of the global financial system from a systemic point of view. However, the discussion paper warned:
âThe growing exposure of institutional investors to such assets as an alternative to or to complement traditional asset classes for trading, lending and borrowing [...] indicate growing interconnectedness with the mainstream financial system.â
Market Capitalization of Major Stablecoins. Source: HKMA.
Based on the above figure, HKMAâs paper shows that the global market capitalization stood at about $150 billion in December 2021, ârepresenting about 5% of the overall crypto-asset market.â The regulator has also shared a list of eight questions to seek policy-related recommendations citing five possible regulatory outcomes â no action, opt-in regime, risk-based regime, catch-all regime and blanket ban:
Possible policy options for regulating crypto-assets. Source: HKMA.
HKMA expects stakeholders to submit their responses by 31st March 2022, and aims âto introduce the new regime no later than 2023/24.â
Major jurisdictionsâ regulatory stance towards stablecoins. Source: HKMA.
On an end note, the regulator stated that payment-related stablecoins have a higher potential for being incorporated into the mainstream financial system or even day-to-day commercial and economic activities.Â
As a result, the HKMA considers expanding the scope of the Payment Systems and Stored Value Facilities Ordinance (PSSVFO), a law that determines the legality of financial products.Â
Related: Hong Kong real estate giant leads $90M raise for crypto bank Sygnum
Complementing the local governmentâs pro-crypto intentions, one of Hong Kongâs largest property developers Sun Hung Kai invested $90 million in Sygnum, a Swiss bank dedicated to digital asset holding.
As Cointelegraph reported, the Series B funding round brings Sygnumâs post-money valuation to $800 million, marking a tenfold surge in consolidated revenues from 2021.
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