Blog: Hong Kong Regulator Canvasses Views on Rules for Crypto Assets, May Adopt Regulatory Framework by 2024 – Gadgets 360

Hong Kong’s de facto central bank invited comment on Wednesday about ways to regulate crypto assets and stablecoins, with the aim of adopting a regulatory framework by 2024 in which the policy spectrum could range from no action to a blanket ban.

The rapid growth of cryptocurrencies and, in particular, stablecoins, or digital assets pegged to traditional currencies, has drawn attention from regulators worldwide, who fear they could put the financial system at risk if not monitored.

The global market value of crypto assets stands at about $2.2 trillion (roughly Rs. 16257406 crore), pointing to their growing inter-connectedness with the mainstream financial system, said Eddie Yue, the Chief Executive of the Hong Kong Monetary Authority (HKMA).

“We place emphasis on issues that may affect the public’s confidence in, and the safety, efficiency, and soundness of, our payment systems, and accord appropriate priority to the protection of users,” the HKMA said in a paper on the topic.

It is seeking feedback from the public and stakeholders by March 31, in a more wide-ranging effort than a recent exercise by the territory’s Securities and Futures Commission (SFC) that focused only on trading platforms for virtual assets.

In its paper, the HKMA focused on the wider implications of stablecoins that may be used in payments, along with aspects of investor protection relating to crypto assets, and regulated institutions’ interface with crypto assets.

It listed five possible choices for regulating crypto assets, ranging from no action to a blanket ban.

Regulated institutions are required to “critically evaluate” their exposures to different types of risks and adopt risk-mitigation measures before setting up ties with providers of crypto asset services, the paper added.

The consultation comes against the backdrop of concerns among policymakers worldwide that crypto assets could be used for illicit purposes, or to take advantage of unsuspecting consumers.

Such worries stem from the complexity and volatility of cryptocurrencies, as well as wildly varying standards around aspects of disclosure, reserves and consumer protection.

© Thomson Reuters 2021

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

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