{"id":545898,"date":"2023-01-31T14:04:28","date_gmt":"2023-01-31T11:04:28","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/hong-kong-will-not-tolerate-algorithmic-stablecoins-in-new-regulation\/"},"modified":"2023-01-31T14:04:28","modified_gmt":"2023-01-31T11:04:28","slug":"hong-kong-will-not-tolerate-algorithmic-stablecoins-in-new-regulation","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/hong-kong-will-not-tolerate-algorithmic-stablecoins-in-new-regulation\/","title":{"rendered":"# Hong Kong will not tolerate algorithmic stablecoins in new regulation"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3378728c0b7\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3378728c0b7\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/hong-kong-will-not-tolerate-algorithmic-stablecoins-in-new-regulation\/#%E2%80%9D_Hong_Kong_will_not_tolerate_algorithmic_stablecoins_in_new_regulation_%E2%80%9C\" >&#8221; Hong Kong will not tolerate algorithmic stablecoins in new regulation &#8220;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Hong_Kong_will_not_tolerate_algorithmic_stablecoins_in_new_regulation_%E2%80%9C\"><\/span>&#8221; Hong Kong will not tolerate algorithmic stablecoins in new regulation &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjMtMDEvNTEyOTQyMjQtYzVlYS00Y2JiLWIxYTQtOTcyMzQ5YTM0NjA3LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a4050f8>In the key principles of its upcoming regulatory framework, the Hong Kong Monetary Authority (HKNA) didn\u2019t find a place for algorithmic stablecoins. Instead, the chief financial regulator will demand all stablecoin issuers back up their values with underlying reserve assets at all times.<\/p>\n<p>On Jan. 31, the HKNA <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.hkma.gov.hk\/media\/eng\/doc\/key-information\/press-release\/2023\/20230131e9a1.pdf\">issued<\/a> the consultation conclusion to the discussion paper on crypto and stablecoins, summarizing the feedback from 58 submissions. In its summary, the regulator repeats the popular formula of a \u201crisk-based and agile\u201d <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach, which is necessary for the maturing crypto industry. <\/p>\n<p>The regulatory arrangements, based on the consultation process, are expected in 2023\/24 either in the form of new legislation or amendments to the existing laws. As repeatedly specified in the paper, the priority would be given to regulating stablecoins that \u201cpurport to reference to one or more fiat currencies.\u201d<\/p>\n<p>The new licensing process would be obligatory for both the issuers that conduct their activity in Hong Kong directly and those companies, that \u201cactively\u201d market their products to the Hong Kong public. The key regulatory principles highlighted the importance of full backing and redemption at par:<\/p>\n<blockquote><p>Stablecoins that derive their value based on arbitrage or algorithm will not be accepted. Stablecoin holders should be able to redeem the stablecoins into the referenced fiat currency at par within a reasonable period.<\/p><\/blockquote>\n<p>The HKNA intends to develop a comprehensive regulatory framework for stablecoins, based on the principle of full backing and redemption at par. It also would restrict the companies from deviating from their principal business. The paper cites the example of wallet operators, which wouldn\u2019t be allowed to engage in lending activities.<\/p>\n<p><strong><em><u><\/u><\/em><\/strong><strong><em>Related: Hong Kong investment fund raises $500M to push mass adoption in Web3<\/em><\/strong><strong><em><\/em><\/strong><\/p>\n<p>As the regulation would focus on the areas of issuance, governance and stabilization, some of the stablecoin-related activities \u201cmay not be captured\u201d in the regulatory scope at the initial stage. Among them are purchasing or exchanging a stablecoin with fiat currency, operation and management of centralized stablecoin lending services, issuance of crypto-asset debit\/credit cards and operation of crypto-asset automated teller machines (ATMs) or exchange shops.<\/p>\n<p>According to a recent report from CryptoCompare, the current market share of algorithmic stablecoins stands at 1.71%, while its all-time high record in April 2022 reached 12.4% of the whole crypto market. <\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/hong-kong-will-not-tolerate-algorithmic-stablecoins-in-new-regulation\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Hong Kong will not tolerate algorithmic stablecoins in new regulation &#8220; In the key principles of its upcoming regulatory framework, the Hong Kong Monetary Authority (HKNA) didn\u2019t find a place for algorithmic stablecoins. Instead, the chief financial regulator will demand all stablecoin issuers back up their values with underlying reserve assets at all times&#8230;.<\/p>\n","protected":false},"author":1,"featured_media":545899,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2023-01\/51294224-c5ea-4cbb-b1a4-972349a34607.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[75493,43256,70934],"class_list":["post-545898","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-stablecoin","tag-hong-kong","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/545898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=545898"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/545898\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/545899"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=545898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=545898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=545898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}