Hong Kong Monetary Authority: No cap on the number of participants in the stablecoin sandbox

Chen Weimin, deputy president of the Hong Kong Monetary Authority, said that in December last year, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority jointly proposed a legislative proposal to establish a regulatory system for stable currency issuers. The consultation ended on February 29, and a total of more than 100 submissions were received. . The Treasury Bureau and the Hong Kong Monetary Authority are studying these opinions and strive to publish the consultation conclusion as soon as possible. The Hong Kong Monetary Authority announced yesterday the launch of a stablecoin issuer sandbox. He said the HKMA has not set a cap on the number of participants in the sandbox. Taking into account the characteristics of stablecoins and proposed regulatory requirements, specific requirements have been set for participation in this "sandbox", including that applicants need to prove that they have a true intention and reasonable plan to issue fiat currency stablecoins in Hong Kong to participate in the "sandbox" There are specific plans in place and reasonable expectations for compliance with proposed regulatory requirements. The HKMA will consider a series of factors, such as the application scenarios proposed by the applicant, price stabilization mechanism, reserve asset management, user protection, etc., to evaluate its application, and will also maintain communication with the applicant during the process. Chen Weimin pointed out that the "sandbox" testing is conducted under limited scope and controllable risks. For example, the number of users and the issuance of stable coins will be limited. In the initial stage, it will not involve the use of customer or public funds. Depending on the participants’ plans and the progress of the test, the HKMA may appropriately adjust the design environment and application scope of the “sandbox”. The HKMA expects participants to use the "sandbox" to demonstrate a feasible stablecoin issuance process, a robust internal control system to manage key operational areas, including the risk of money laundering, and to adopt appropriate measures to protect the rights and interests of users. The HKMA will also formulate good practices in various operational areas based on the experience and feedback gained during the testing process, so as to improve the efficiency and effectiveness of supervision in the future. "Sandbox" participants need to comply with relevant terms and regulations, and the HKMA may terminate a participant's qualifications in the event of any non-compliance with the "Sandbox" requirements. It should be emphasized that successfully becoming a "sandbox" participant does not mean obtaining any recognition or supervision from the Hong Kong Monetary Authority or other financial regulatory agencies. "Sandbox" participants who intend to apply for a license in the future must still comply with the regulatory system that will be implemented in the future. Submit a separate application to the Hong Kong Monetary Authority. (Economic Journal)