The Hong Kong region plans to open licensing for stablecoins by the end of the year through the stablecoin bill.

Source: Cointelegraph Original: “Hong Kong region passes stablecoin bill, plans to open licensing by the end of the year”

The Legislative Council of Hong Kong has officially passed the stablecoin bill, paving the way for the establishment of a regulatory framework. This move is expected to position Hong Kong as a leader in the global digital asset and Web3 development sector.

In a message released on May 21 on social platform X, Hong Kong Legislative Council member Wu Jiezhuang confirmed that the bill has successfully passed its third reading, thereby clearing the final hurdle for implementation.

“It is expected that by the end of 2023, major financial institutions will be able to submit applications to the Hong Kong Monetary Authority to obtain stablecoin issuer licenses,” said Member Wu in a statement.

According to the new legislation introduced in Hong Kong, stablecoins must be backed by fiat currency as underlying assets. Member Wu stated that Hong Kong welcomes “global companies and institutions interested in applying for the issuance of stablecoins in the Hong Kong region” and is willing to personally assist in establishing connections and cooperation.

“I am also very willing to facilitate connections and collaboration with all stakeholders to jointly promote the development of Web3 in Asia and globally, and to build the Hong Kong region as a core hub.”

Member Wu stated that the legislation marks the first step in building Web3 infrastructure in the Hong Kong region. “The most critical aspect is to develop more practical application scenarios.”

Member Wu pointed out that the application of stablecoins has the potential to drive innovation in retail payments, cross-border trade, and peer-to-peer transactions.

He further emphasized that he encourages the development and application of stablecoins because “they represent a significant financial innovation.” Regarding improving market stability, Congressman Wu suggested distributing interest earnings to stablecoin holders.

According to Rep. Wu, “The provision of interest will significantly enhance the market competitiveness of stablecoins.” He explained that this increased competitive advantage would spur broader market participation and expand the stablecoin market share, thus supporting what he sees as a sustainable model.

The viewpoint of Congressman Wu regarding the competitiveness of yield-bearing stablecoins has been supported by the latest data. Research shows that the circulation of yield-bearing stablecoins has risen to $11 billion, accounting for 4.5% of the entire stablecoin market, a significant increase compared to $1.5 billion and a 1% market share at the beginning of 2024.

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