Hong Kong Chief Executive proposes statutory licensing for VASPs in his policy address


John Lee, Chief Executive of the Hong Kong Special Administrative Region, mentioned A bill proposing to establish a statutory licensing regime for virtual asset providers in its 2022 policy address delivered on October 19.

In its policy speech, Hong Kong’s de facto central bank, the Hong Kong Monetary Authority (HKMA), outlined its efforts to conduct market consultations on stablecoin regulation, as well as international regulatory standards and the local situation going forward. It also mentions plans to align with the regulatory regime.

The policy speech also helped the HKMA lay the groundwork for the future launch of Hong Kong’s retail central bank digital currency (CBDC), ‘e-HKD’, and to expand testing of China’s CBDC, ‘e-CNY’. confirmed that it is working with mainland stakeholders. ”

HKMA progress

So far, the HKMA has already conducted two of the three market consultations. According to his blog post published Sept. 20 by the De facto Central Bank, this feedback is gaining traction among participants, who are voicing their concerns about privacy, legal considerations, and use cases for e-HKD. It also points out concerns about

The HKMA said it will take a three-rail approach to integrate market feedback into the development of the e-HKD. Rail 1 involves building the legal and technical foundations to create the wholesale tier of the two-tier e-HKD system. Rail 2, running side-by-side with Rail 1, will cover use cases and applications, implementation and design through a series of test pilots, while Rail 3 will see the launch of e-HKD.

The HKMA has not announced a start date or timeframe for the e-HKD. However, we estimate that building the wholesale system will take 2-3 years, and we plan to provide a work plan for the wholesale layer in June 2023.

Hong Kong will also continue to experiment with connecting e-CNY to its domestic payment network from June onwards. This latest trial explores how Hong Kong citizens can top up their e-CNY digital wallets using the city’s faster payment system via mobile phones.

The HKMA has also signed a government-to-government cross-border CBDC project titled Multiple CBDC Bridge (mBridge) with the Bank for International Settlements, the Central Banks of Thailand, China and the United Arab Emirates.

On 4 October 2021, the HKMA released a white paper titled “e-HKD: A Technical Perspective”, exploring potential technical design options for retail CBDC issuance and distribution.

Posted In: China, Uncategorized

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