For the second time in a month, Hong Kong’s de facto central bank sought to temper excitement surrounding stablecoins, warning against overly vague concepts and operations, stock speculation and money-laundering risks.
Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority (HKMA), said in a blog post on Wednesday that efforts to cool down discussions about stablecoins in the market and society over the past month required some strengthening. “We need to guard against excessive market and public opinion speculation,” he said.
Hong Kong’s stablecoin ordinance, which passed in late May and will take effect on August 1, requires issuers to obtain a licence from the HKMA and meet strict requirements on reserve assets and other factors. “Dozens of institutions” got in touch with the HKMA either wanting to apply for licences or explore possibilities, Yue said.
Next week, the HKMA will set out arrangements for accepting and processing licence applications. It will also aim to publish the results of two consultations around the same time: on guidelines for supervising licensed stablecoin issuers and for anti-money-laundering and counterterrorism financing requirements for regulated stablecoin activities.
Without naming names, Yue said that some of the institutions considering stablecoins failed to propose feasible, specific solutions and implementation plans, or lacked risk-management awareness and ability.
“Many of them are still at the conceptual stage, such as proposing to improve cross-border payment efficiency, support the development of Web 3.0 [or] improve the efficiency of the foreign-exchange market, but lack practical application scenarios,” he said.
A “bubble” could be forming, which deserved more attention, as some listed companies’ stock prices and trading volumes surged simply because they claimed an intention to develop stablecoin operations, “regardless of whether their main business is related to stablecoins or digital assets”, he added.
