Global: Hong Kong to Strengthen Digital Asset Regulation in 18 Months

Hong Kong is set to enhance its digital asset regulations over the next 18 months, marking a crucial step towards solidifying its position as a global fintech hub.

At the Foresight 2024 annual summit, David Chiu, a Legislative Council member of the Hong Kong Special Administrative Region specializing in Technology and Innovation, outlined the city’s strategic plans. These include attracting technology talent, developing new infrastructure, and implementing robust legislative oversight.

Developing a Strong Digital Asset Framework

Chiu stressed the importance of this initiative for the technology sector over the next five to ten years. “The digital asset industry has made substantial strides recently, yet it remains in its early stages,” Chiu remarked. “It is essential to establish a comprehensive exchange system and promptly introduce legislation concerning stablecoins.”

Stablecoins, which are cryptocurrencies tied to stable assets like fiat currencies, are anticipated to be regulated in Hong Kong by the end of this year.

Chiu indicated that sandbox tests have already been conducted. The government plans to enhance supervision and enforcement of legislation related to digital asset financial products within the next 12 to 18 months. The forthcoming phase will encourage project stakeholders to explore innovative financial products within Hong Kong.

Stablecoin Sandbox

On July 18, the Hong Kong Monetary Authority (HKMA) announced the initial participants in its stablecoin issuer sandbox. These participants include a company associated with a major Chinese e-commerce retailer, a local fintech firm, and a consortium comprising Standard Chartered Bank, Animoca Brands, and Hong Kong Telecommunications.

Among the participants, Jingdong Coinlink Technology Hong Kong Limited, a subsidiary of JD Technology Group, plans to issue a 1:1 stablecoin pegged to the Hong Kong dollar (HKD). However, the company clarified that participation in the sandbox does not imply endorsement or authorization to issue stablecoins.

The proposed stablecoin legislation reflects Hong Kong’s commitment to a pro-crypto financial approach, aiming to foster innovation while maintaining regulatory oversight. On July 23, CSOP Asset Management, one of China’s largest asset managers, introduced Asia’s first Bitcoin BTC futures inverse product in Hong Kong.

The CSOP Bitcoin Future Daily (-1x) Inverse Product (7376.HK) follows the firm’s successful launch of the Bitcoin Futures ETF (3066.HK) in December 2022, highlighting Hong Kong’s evolving role as a leader in digital asset innovation.