Thomas Daniels
Hong Kong is set to significantly enhance its digital asset regulation within the next 18 months, solidifying its ambitions to become a global fintech leader. The city’s strategic move aims to attract top global fintech talent, drive innovation, and ensure the security and integrity of digital asset transactions.
Speaking at the Foresight 2024 annual summit, David Chiu, a member of the Legislative Council of the Hong Kong Special Administrative Region for Technology and Innovation, detailed the city’s roadmap for fostering technology growth. This includes building advanced infrastructure, attracting technology professionals, and implementing robust legislative oversight.
Establishing a Robust Digital Asset Framework
Chiu underscored the importance of this initiative, noting its critical role for the next five to ten years in the technology sector. “The digital asset industry has made remarkable strides in recent years, but we are still in the nascent stages,” Chiu stated. “We must establish a comprehensive exchange system and swiftly introduce legislation governing stablecoins.”
Stablecoins, cryptocurrencies tied to stable assets like fiat currencies, are anticipated to be introduced in Hong Kong by the end of the year. Chiu noted that sandbox testing has already commenced, with the government targeting enhanced supervision and enforcement of digital asset financial product legislation within the next year to 18 months. The following phase will encourage the exploration of innovative financial products in Hong Kong.
Stablecoin Sandbox Initiative
The Hong Kong Monetary Authority (HKMA) announced on July 18 the first participants in its stablecoin issuer sandbox. These include a subsidiary of a major Chinese e-commerce firm, a local fintech company, 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 inclusion in the sandbox does not constitute an endorsement or a license to issue stablecoins.
This planned stablecoin legislation exemplifies Hong Kong’s proactive approach to cryptocurrency regulation, aiming to nurture innovation while maintaining regulatory control. On July 23, CSOP Asset Management, one of China’s largest asset managers, launched Asia’s first Bitcoin futures inverse product in Hong Kong. The CSOP Bitcoin Future Daily (-1x) Inverse Product (7376.HK) follows the successful debut of the firm’s Bitcoin Futures ETF (3066.HK) in December 2022.
