Hong Kong’s de facto central bank on Wednesday issued an invitation to comment on ways to regulate crypto assets and stablecoins, with the aim of adopting a regulatory framework by 2024 in which the political spectrum could range from non-measures to a blanket ban .
The rapid growth of cryptocurrencies, and particularly stablecoins or digital assets pegged to traditional currencies, has drawn the attention of regulators around the world who fear that if left unchecked, they could jeopardize the financial system.
The global market value of crypto assets is about $ 2.2 trillion (roughly Rs.16,257,406 billion), indicating their growing interdependence with the mainstream financial system, said Eddie Yue, chief executive of the Hong Kong Monetary Authority (HKMA).
“We are focusing on issues that can affect public trust and the security, efficiency and soundness of our payment systems, and we are giving appropriate priority to protecting users,” the HKMA said in a paper on the subject.
It is soliciting feedback from the public and stakeholders by March 31, in a broader effort than a recent exercise by the Territory’s Securities and Futures Commission (SFC) that focused only on virtual asset trading platforms.
In its paper, the HKMA focused on the broader implications of stablecoins that can be used for payments, along with investor protection issues related to crypto assets and the interface of regulated institutions to crypto assets.
She listed five possible options for regulating crypto assets, ranging from no action to a blanket ban.
Regulated institutions must “critically assess” their exposure to various types of risk and take risk mitigation measures before engaging with crypto asset service providers, the paper added.
The consultation is taking place against the background of concerns of policy makers around the world that crypto-assets could be used for illegal purposes or to exploit unsuspecting consumers.
Such concerns arise from the complexity and volatility of cryptocurrencies, as well as widely varying standards of disclosure, reserves, and consumer protection issues.
© Thomson Reuters 2021
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