“Regular independent audits and strict disclosure obligations further bolster confidence in the sector, although in the short run it may increase operational costs and limit market entry, particularly for smaller or emerging stablecoin issuers,” said Amita Haylock, technology partner at Mayer Brown law firm.
As the 2023 law on virtual asset trading platforms (VATPs) did for other cryptocurrencies, the new stablecoin ordinance – governing assets pegged to fiat currencies such as the US dollar (USD) and Hong Kong dollar (HKD) – imposes strict rules with high compliance costs on companies that require a licence to do business in the city. Stablecoin licences are governed by the Hong Kong Monetary Authority (HKMA), unlike other virtual assets, which fall under the Securities and Futures Commission (SFC).
“I think the most important benefit is that it provides virtual asset businesses legal certainty,” Haylock said. “Over time … the clarity provided in the stablecoins ordinance would encourage larger financial institutions to build token-based products in Hong Kong.”
