Hong Kong’s plan to bring in a Stabelcoin bill has inched another level closer. According to local media report, in an attempt to strike a balance between consumer protection and financial stability while advancing its agenda on virtual assets, the Hong Kong government has published a stablecoin bill in the gazette, bringing the proposed regulatory regime one step closer to becoming law.
The new development comes against the backdrop of a higher crypto adoption globally and Hong Kong’s aim to become a crypto hub in Asia.
Hong Kong’s Stablecoin Regulation: What Is Happening?
The publication comes as an aftermath of the public consultation in July 2024 between industry participants and the Hong Kong Monetary Authority (HKMA), the city’s financial affairs office. In order to test its use in various contexts, three stablecoin issuers were admitted in July.
Hong Kong, a prominent global financial hub, has previously proposed to exempt super-rich people’s investment vehicles, hedge funds, and private equity funds from paying taxes on profits from cryptocurrency, private credit investments, and other alternative assets.
The government announced that on December 18, the Stablecoins Bill will be presented to the Legislative Council for a first reading.
Hong Kong Aims At Being Crypto Hub in Asia
Creating a “favorable environment” that will entice asset managers to set up shop in the area is the goal of this calculated action.
The new plan from Hong Kong aims to address taxation, which is regarded as one of the primary determinants of where asset managers decide to conduct business.
For Hong Kong to meet its responsibilities as a Financial Stability Board member, the legislative proposal is crucial. The goal of this risk-based proposal is to support a strong regulatory framework that is consistent with Hong Kong’s strategy for the development of virtual assets.
Hong Kong’s Crypto Market Likely To Rise In Future
The proposal will likely pave way for Hong Kong to become a crypto hub in the world. Hong Kong has become a significant cryptocurrency trading hub, drawing in foreign investors and supporting a thriving cryptocurrency ecosystem. At present, Hong Kong’s cryptocurrency market is projected to bring in $71.0 million in revenue by the end of 2024.
By 2025, this revenue is expected to have grown at a compound annual growth rate (CAGR) of 3.08%. It is projected that the average revenue per user in the cryptocurrency market will be US$181.4 in 2024.
Hong Kong will likely witness 393.50k investors in cryptocurrency market by 2025. The percentage of the population that uses cryptocurrencies, or the user penetration rate, is predicted to be 5.22% in 2024 and rise to 5.25% by 2025.