Hong Kong Monetary Authority Launches Stablecoin Issuer Sandbox

On March 12, the Hong Kong Monetary Authority (HKMA) launched what is known as the stablecoin issuer sandbox arrangement. The HKMA stated that applicants interested in establishing a stablecoin business in Hong Kong should have a sound business plan. The regulator also clarified that admission into the sandbox does not imply endorsement or support for any specific applicant.

Sandbox to Serve as a Communication Channel

The Hong Kong Monetary Authority (HKMA) has launched what is being referred to as a stablecoin issuer sandbox arrangement. This arrangement is designed to communicate the HKMA’s supervisory expectations to parties interested in issuing fiat-referenced stablecoins. The sandbox is also expected to serve as a channel for stablecoin market participants to relay their feedback on proposed regulatory requirements.
In a statement issued on March 12, the HKMA stated that sandbox applicants who are keen on establishing a stablecoin business in Hong Kong should have a reasonable business plan. Furthermore, the HKMA added that the sandbox operations of prospective stablecoin issuers must be of “limited scope” and conducted in a “risk-controllable manner.”
Commenting on the launch of the sandbox arrangement by HKMA, Eddie Yue, the financial regulator’s chief executive, said:
“The sandbox arrangement serves as an effective channel for the HKMA and the industry to exchange views on the proposed regulatory regime, and will facilitate the formulation of fit-for-purpose and risk-based regulatory requirements, which is key to promoting the sustainable and responsible development of the stablecoin issuance business.”

According to the statement, the Hong Kong Monetary Authority (HKMA) will consider several factors when evaluating applications. However, the HKMA clarified that admission into the sandbox does not imply endorsement or support for any particular applicant.
The statement also disclosed that prospective stablecoin issuers intending to apply for a license must submit a separate application. Prospective applicants can express their interest in joining the sandbox by sending an email to the address provided by the HKMA
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