According to an official statement from the Hong Kong government, ‘old money’ may prefer regulated stablecoins pegged to the HKD.
The regulated nature of a potential Hong Kong dollar-pegged stablecoin could be favored by “old money” in competition with already widespread US dollar-pegged stablecoins, a Hong Kong government official said.
“Granting licenses with the support of the HKMA, which is the most reputable regulator, can actually give a lot of confidence to industry players,” King Leung, head of fintech and financial services at Invest Hong Kong, told The Block. In an interview. “We’re talking about institutional investors as well as retail (investors), because that’s where the big money is.”
It aims to “strengthen Hong Kong’s position as Asia’s leading international business hub,” according to the website of Invest Hong Kong, the government department responsible for foreign direct investment in the region.
Leung’s remarks come to Hong Kong. We have launched a “sandbox” contract for stablecoin issuers. It will pave the way for future regulations early this month. Hong Kong authorities concluded consultations on stablecoin issuer regulation on February 29.
In December, the Hong Kong Monetary Authority together with the Department of Financial Services and Treasury Consultation has begun It was proposed that all fiat-referenced stablecoin issuers should obtain a license from the HKMA.
Market demand
With stablecoins pegged to the US dollar dominating the stablecoin market, some industry insiders have questioned the market demand for HKD stablecoins.
Alessio Quaglini, CEO and co-founder of Hong Kong-based cryptocurrency custodian Hex Trust, said: said The Hong Kong dollar does not require a stablecoin. “I don’t think there’s room for more than one provider,” Quaglini said.
However, Animoca Brands Chairman Yat Siu said a stablecoin pegged to the HKD could secure its own space in the already saturated cryptocurrency market. “But if you want another kind of regulated currency that is not American but is still tied to the U.S. system like the U.S. dollar, I think the Hong Kong dollar would be a very interesting proxy.” Siu told The Block Today in Seoul.
InvestHK’s Leung said demand for stablecoins is likely to increase as the world looks to the entire cryptocurrency world to “buy things on-chain.”
“As I said, if you are an institutional official and have fiduciary responsibility for your customers’ money, you would not purchase stablecoins from an unregulated institution,” Leung added.
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