The Hong Kong Monetary Authority launches "sandbox" program to guide the issuance of stablecoins towards regulatory compliance.

The Hong Kong Monetary Authority stated that the main purpose of the "sandbox" program launch is to support the continuous development of the virtual asset ecosystem in Hong Kong. Through this program, the Monetary Authority not only hopes to convey regulatory expectations to issuers who are truly willing and ready to issue fiat-backed stablecoins in Hong Kong but also provides a set of compliance guidelines to help these issuers navigate future regulatory frameworks.

Ensuring the Effectiveness and Applicability of Regulatory Frameworks

Through the "sandbox" scheme, the Monetary Authority collects feedback from participants on proposed regulatory requirements to ensure that the upcoming regulatory framework achieves regulatory objectives without overly hindering industry development. The scheme also aims to promote industry best practices, especially in key areas such as reserve management, stability mechanisms, governance, user protection, and data transparency.

Application Process and Evaluation Criteria

Institutions interested in participating in the "sandbox" need to submit an application to the Monetary Authority, demonstrating their genuine intent, reasonable plans, and the ability to meet the proposed regulatory requirements. During the application process, the Monetary Authority may request more information to ensure a full understanding and assessment of the business model.

Entering the Sandbox is Just the First Step

It is worth noting that even if an institution successfully becomes a participant in the "sandbox," it does not imply any endorsement from the Monetary Authority or a guarantee of future supervision by Hong Kong financial regulatory authorities. Furthermore, after the regulatory regime is formally implemented, participants will still need to apply for a license based on the new requirements to operate legally.