The United States is now drafting three bills to regulate the stablecoin industry, with the goal of introducing them by the first week of June.
The Hong Kong Monetary Authority (HKMA) hopes to publish precise regulatory guidelines for the stablecoin market by the end of 2024 after concluding a public consultation on stablecoin laws.
According to Hong Kong’s Under Secretary for Financial Services and the Treasury, Joseph Chan Ho-Lim, the city has emerged as a significant fintech centre, and authorities are actively promoting the Web3 ecosystem while placing a high priority on investor protection.
Algorithmic stablecoins were categorically forbidden in the regulatory framework in Hong Kong in January 2023 after discussions on stablecoin legislation started in January 2022. The HKMA mandates that stablecoin issuers keep underlying reserve assets on hand to support their values constantly.
Compared to its Western peers, Hong Kong has adopted a pro-active approach to cryptocurrency regulation. The HKMA has established a licensing system for cryptocurrency exchanges and permitted retail traders to trade cryptocurrencies while enforcing stringent anti-money laundering laws.
The US House Financial Services Committee is debating stablecoin laws with Hong Kong. The committee introduced three draft proposals in 2023, the most recent of which gave the Federal Reserve significant jurisdiction and gave states minimal ability to intervene in the stablecoin market.
The efforts to regulate stablecoins in Hong Kong and the US show how important it is to create a stablecoin regulatory framework in order to provide consumer protection and financial stability.