Stablecoin Issuers Will Have to Obtain a License in Hong Kong

The Hong Kong Monetary Authority has announced it plans to introduce mandatory licensing for stablecoin issuers during 2023-2024.

According to the feedback received on the draft changes in the powers of the regulator, the Hong Kong Monetary Authority will ban the use of algorithmic stablecoins like Terra USD, which as we all remember caused turbulence in the cryptocurrency market in the spring of 2022.

The watchdog plans to oversee the management, issuance, and maintenance of fiat token pegging.

According to the document:

“The value of reserve assets should always correspond to the value of ‘stable coins’ in circulation. The collateral must be of high quality and liquidity.”