Author: Qin Jin
The "compliance" development of stablecoins may usher in the most important period in the history of cryptography.
Following the announcement of the "Regulatory Framework for Stablecoins" by the Monetary Authority of Singapore, the Hong Kong Monetary Authority also stated that it plans to launch a "Regulatory Framework for Digital Hong Kong Dollars or Stablecoins."
On August 25, according to the website of Radio Television Hong Kong, the Hong Kong Monetary Authority stated that it is studying the establishment of a regulatory framework for the digital Hong Kong dollar or stable currency, and promoting the application of distributed ledger technology (DLT) in the industry to tokenize bank deposits. Seminars will be held with the industry to introduce DLT technology.
Ruan Guoheng, vice president of the Hong Kong Monetary Authority, said that there is no timetable for the promotion of deposit tokenization, and it will not be mandatory for all banks to follow suit. The relevant process will not be linked to the study of the digital Hong Kong dollar, and the two will be carried out in parallel.
Twin cities accelerate the layout of "regulatory framework"
Compared with the United States and Hong Kong, Singapore took the lead in releasing the "Stablecoin Regulatory Framework", providing a reference for other latecomers to learn from the best path for the compliance development of stablecoins, thus accelerating the compliance development of the global encryption ecosystem Put it on the agenda.
According to the "Lianhe Zaobao" report, the TerraUSD stablecoin suddenly collapsed in May 2022, triggering a major shock in the cryptocurrency market and causing many investors to suffer losses. Stablecoins are no longer stable, causing global regulators to pay attention to the field. Many countries and regions have successively conducted consultations or promulgated draft legislation, including Japan, the European Union, the United Kingdom, and Hong Kong.
In October 2022, the Monetary Authority of Singapore launched a public consultation on the "Stablecoin Regulatory Framework". After nearly a year, on August 15, 2013, the Singapore Monetary Authority issued a stablecoin regulatory framework and considered the latest Feedback, with the aim of ensuring that the value of regulated stablecoins in Singapore is highly stable.
If properly regulated and stable in value, stablecoins can serve as a trusted medium of exchange and support innovation, including the "on-chain" purchase and sale of digital assets, the Monetary Authority of Singapore said.
The Monetary Authority requires that stablecoins issued in Singapore can only be linked to the Singapore dollar or any G10 currency, such as the U.S. dollar, pound, yen, etc. Reserve assets can only include cash, cash equivalents and three-month government bonds denominated in the linked currency. Reserve assets are subject to audit and assets are segregated for timely redemption at face value.
In contrast, the Hong Kong Monetary Authority's "stablecoin regulatory framework" is currently in the research stage, but the announcement itself is an important signal of the importance of the "stablecoin regulatory framework", which has attracted enough attention from the industry. Combined with the development path of the regulatory framework introduced by the Monetary Authority of Singapore, we speculate that the Hong Kong Monetary Authority will consider public consultation with the industry in the next stage, and then release the regulatory framework to the public in the next stage. If we set a time limit, perhaps at this time next year, we can See the regulatory framework for stablecoins released by the Hong Kong Monetary Authority.
Behind the successive deployment of the "stable currency regulatory framework" in the two cities, it has gradually demonstrated the urgency and ambition of both parties in building an Asian financial center in the future encryption era.
Stablecoin supervision protects innovation
Mike, founder of GoPlus Security, told "Carbon Chain Value" that the "instability" of stablecoins has become one of the biggest problems plaguing the development of the industry. How stablecoins cooperate with traditional financial institutions in the context of regulatory compliance is one of the issues that currently requires regulatory attention. For example, in the case of cooperation between USDC, a compliant stablecoin issued by Circle, an American encryption institution, and Silicon Valley Bank, after the latter announced the collapse of the run, the second disaster "anchoring event" brought to USDC has knocked the industry to some extent. Regulatory alarm bells sounded.
In Mike’s view, the current stablecoins not only have a very large circulation in the encryption ecosystem, but also an important bridge connecting the encryption ecosystem and real assets. "Risk" and "uncertainty".
On this basis, regulatory agencies need to come forward to build a stablecoin regulatory framework to supervise the issuance process of stablecoins and ensure asset security. In the future, more and more countries and regions will release their own "stable currency regulatory framework", which will allow their country's legal currency to flow into the encryption ecological field. This move not only promotes the development of the industry, but also allows other countries’ legal currencies to bypass the U.S. dollar and directly enter the encryption ecosystem.
In the view of Yu Jianing, president of UWEB and honorary chairman of the Hong Kong Blockchain Association, “The balance between financial innovation and financial stability is the main challenge faced by all financial regulators. As a financial innovation product that has emerged in recent years, stablecoins have rapidly The development and wide range of application scenarios have attracted the attention of global financial regulators. Especially in some major financial transactions and cross-border payment scenarios, the use of stablecoins has begun to have an impact on the traditional financial structure and monetary system. In order Ensuring the stability and security of the financial market and timely formulating and improving the regulatory framework for stablecoins have become top priorities for regulatory agencies."
Yu Jianing said that there are three points of significance for the twin cities to accelerate the layout of the stable currency regulatory framework.
First of all, the emergence of stablecoins has brought new opportunities to the financial market, especially in the fields of payment, settlement and digital asset trading. These new financial tools have the potential to improve the efficiency of capital flows and reduce transaction costs, thereby bringing more vitality and competitiveness to the financial markets of the two places.
But at the same time, stablecoins also bring potential risks, especially in terms of financial stability, anti-money laundering and combating terrorist financing. Therefore, the primary purpose of the financial regulators in Singapore and Hong Kong in formulating a regulatory framework for stablecoins is definitely to ensure the stability and security of the financial market. Through clear regulatory rules, market participants can be provided with a clear and predictable operating environment, thereby encouraging compliant, transparent and responsible market behavior.
In addition, these two cities are also actively participating in and shaping the development trends of global digital assets and financial technology by formulating a regulatory framework for stablecoins. As digitization and globalization accelerate, competition in the financial market has become increasingly fierce. By actively participating in the regulation and development of stablecoins, Singapore and Hong Kong can not only provide a favorable environment for the development of local financial technology companies, but also further consolidate and enhance their leadership in the global financial market.
Hong Kong’s RWA abacus
Carbon Chain Value also found information from the news released by the Hong Kong Monetary Authority that is different from the stablecoin regulatory framework, which is to "promote the industry to apply distributed ledger technology (DLT) and tokenize bank deposits, and will hold a meeting with the industry next quarter." The seminar introduces DLT technology."
According to the literal meaning of carbon chain value, this sentence can be tentatively summarized as real world asset tokenization (RWA).
On August 23, Wang Yang, vice president of the Hong Kong University of Science and Technology and chief scientific advisor of the Hong Kong Web3.0 Association, published an article entitled "Seize the opportunity to issue a Hong Kong dollar stable currency supported by the government" in Ta Kung Pao.
The article stated that RWA is a breakthrough change in the field of digital assets and has the potential to redefine the market structure. Through blockchain technology, RWA tokenization increases transaction transparency, enhances security, and broadens liquidity by enabling fractional ownership. This approach not only solves the inefficiency of the traditional financial system, but also narrows the gap between the digital asset field and the real economy, thereby promoting the development of Web3.
Chen Jinghong, Assistant President of Banking Supervision of the Hong Kong Monetary Authority, pointed out that he hopes that DLT technology will be more widely used in the future, such as reducing the transaction time of bond issuance to T+1; Opponent risk.
He admitted that the DLT platform still faces limitations such as whether the technology is mature enough and whether the stability is sufficient, and further research is needed in the future, but when the technology is mature, there is an opportunity to expand to the tokenization of securities, buildings, and mortgage products in the future.
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