Hong Kong passed its stablecoin legislation in May. The legislation comes into force next week on 1 August. On the back of the launch there’s been a flurry of firms announcing stablecoin plans, causing spikes in stock prices and crypto tokens. Several scams have also surfaced, with the new legislation imposing hefty fines on unlicensed entities that market stablecoins. This week Eddie Yue, CEO of the Hong Kong Monetary Authority (HKMA), said there’s a need to “further rein in the euphoria”.
In his view, this frothiness in the market is unwarranted, because the HKMA only plans to issue a handful of stablecoin licenses in the first instance, leaving most applicants disappointed.
The number of successful new applicants could be even smaller. There’s a reasonable chance that the HKMA will give precedence to participants in the Stablecoin Sandbox. They include a consortium that includes Standard Chartered, JD Coinlink – a subsidiary of China’s giant ecommerce company, and RD InnoTech. However, priority treatment may not guarantee immediate success.
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