On May 21, 2024, the Hong Kong Legislative Council officially passed the Stablecoin Issuers Bill in its third reading, setting a new benchmark for Hong Kongs digital asset regulation. Bitcoin also continued its upward trend and hit a record high. The bill provides the first complete regulatory framework for fiat-referenced stablecoins (FRS), taking into account financial stability, risk control and technological innovation.
As the first virtual asset trading platform licensed by the Securities and Futures Commission in Hong Kong, OSL Group has expressed great concern and active support for this. We believe that at this critical moment when the global traditional financial system is facing a reshaping, this will have a profound impact on the development of the digital asset market and provide strong development momentum.
Key points of Hong Kong’s stablecoin regulatory framework
The Stablecoin Issuers Bill mainly targets fiat-pegged stablecoins (FRS). Its core content reflects the Hong Kong Monetary Authority (HKMA)’s balance between innovation and risk control:
• 100% Reserve and Segregated Custody: Licensed issuers must maintain a robust stablecoin mechanism to ensure that reserve assets are composed of high-quality, highly liquid assets and are equal to the denomination of fiat stablecoins in circulation at all times. These reserve assets must be properly separated and kept from the issuer’s own assets to ensure the safety of funds.
• Unconditional redemption mechanism: Stablecoin holders have the right to redeem stablecoins at par from the issuer. Redemption requests must be free of any fees and must be processed within a reasonable time.
• Strict compliance framework: Licensed issuers must meet a series of stringent regulatory requirements, including anti-money laundering (AML), risk management, full disclosure of information and qualified auditors to ensure transparency and soundness of operations.
• Trading on licensed platforms: Stablecoins must be traded on licensed virtual asset trading platforms to strictly ensure transaction compliance and investor protection requirements.
Far-reaching significance for the digital asset industry
The passage of the Stablecoin Bill is not only of great significance to Hong Kong, but also sets a forward-looking institutional benchmark for the global digital asset industry. The bill enhances institutional transparency, strengthens market confidence, helps attract more traditional financial institutions to enter the Web3 field, and promotes the deep integration of digital assets and traditional finance. At the same time, the bill will accelerate the practical application of stablecoins in scenarios such as cross-border payments, digital securities, and DeFi, and release greater potential. As one of the first jurisdictions in the world to establish stablecoin legislation, Hong Kong has consolidated its position as an international financial center, strengthened its policy first-mover advantage, and gained more voice in the future digital financial system, seizing the strategic high ground of digital coinage rights.
OSL’s role in the stablecoin ecosystem
As a licensed virtual asset trading platform in Hong Kong, OSL plays a key role in the construction of the local stablecoin ecosystem. Relying on its compliance qualifications and sound infrastructure, OSL provides diversified services such as trading, brokerage, and custody to build the underlying support required for stablecoin transactions. At the same time, the platform actively promotes the process of asset tokenization, covering stablecoins, structured products and funds, etc., to help institutional clients improve the efficiency of capital use. In addition, OSL has established a cooperative network with issuers, custodians and payment institutions to explore the actual implementation of stablecoins in various application scenarios, helping Hong Kong to build a complete and efficient stablecoin ecological closed loop.
Gary Tiu, Executive Director and Head of Regulatory Affairs, OSL Group:
“OSL Group actively participated in the discussion on stablecoin policy formulation in Hong Kong, witnessed and promoted the formation of the stablecoin framework. The regulations set unified standards for the development of the industry, which will help improve transparency and long-term stability.”Eugene Cheung, Chief Commercial Officer, OSL Group:
“Stablecoins are a bridge connecting global capital and on-chain efficiency. By achieving value anchoring through compliance, we are working with our customers to build a more secure, controllable and scalable digital financial system.”
Build a responsible market ecosystem
OSL Group firmly believes that a regulated, transparent and robust stablecoin system will become a key force connecting the Web3 ecosystem and the global financial system. To this end, we will continue to strengthen compliance construction, expand ecological cooperation, and provide customers with reliable digital asset solutions. In the future, OSL will work with regulators, market participants and investors to jointly promote Hong Kongs position as a world-leading digital asset center and build a responsible and sustainable market ecology.
