Currently, stablecoins are more commonly used to invest in other virtual assets. In recent years, there have been occasional frauds in the virtual currency market. The HKMA's consultation document proposes that in the future, issuing stablecoins in Hong Kong without a license, as well as issuing advertisements to promote stablecoins of non-licensed issuers, will be criminal offenses.
Licensed institutions may be fined and disqualified if they violate regulations
Even for those institutions that obtain licenses and become qualified to issue stablecoins, the document also recommends that the regulatory system should introduce a series of civil and regulatory sanctions. The HKMA may consider imposing appropriate penalties depending on the severity and duration of the violations, including temporary or permanent suspension of licenses, revocation of licenses, and fines of not more than HK$1000 million, or a fine of three times the amount of profit gained or loss avoided due to the violation, whichever is higher.
For licensed institutions, if the issuer violates the relevant proposed legal provisions or operates improperly, the document proposes to empower the HKMA to force all personnel of the institution suspected of violation to provide evidence, including any records or documents, and to apply to the magistrate for a search warrant and conduct seizure if necessary.
The MAS proposes that issuers must have sufficient financial resources, with a minimum share capital requirement of HK$2500 million. When an institution defaults or goes bankrupt, which may have a potential impact on the financial system, the MAS may intervene in the operations of the licensee when necessary and require that the affairs, business and property of the licensee be managed by an administrator appointed by the MAS.