Hong Kong General Chamber of Commerce Asks Government to Allow Yuan-Linked Stablecoins

The Hong Kong General Chamber of Commerce (HKGCC) has asked policymakers to consider allowing the issuance of Chinese yuan-linked stablecoins.

In a statement released on Tuesday, the influential business organization emphasized the importance of retaining and attracting talent and businesses in Hong Kong and proposed the exploration of a “Virtual Asset Connect Scheme.”

The HKGCC suggested that the government should permit the issuance of yuan-linked stablecoins or those backed by a basket of various fiat currencies, including the yuan, Hong Kong dollar, or U.S. dollar.

While details about the proposed Virtual Asset Connect Scheme were not provided in the proposal, the organization suggested an initial daily limit of approximately HK$20 billion ($2.5 billion).

Hong Kong’s Upcoming Budget

The recommendations come ahead of the Financial Secretary’s upcoming budget address, scheduled for later this month.

The HKGCC noted the importance of enhancing Hong Kong’s overall operating environment and addressing acute manpower shortages as key objectives for the proposals.

In December, the Hong Kong Monetary Authority (HKMA) released a joint consultation paper with the Financial Services and the Treasury Bureau, indicating that stablecoin issuers would require licenses if their stablecoins referenced the value of one or more fiat currencies in Hong Kong.

The two-month consultation period for this paper is set to conclude at the end of the month.

Christopher Hui, the Secretary for Financial Services and the Treasury, recently revealed plans to introduce a sandbox for exploring stablecoin issuance in collaboration with key industry players in the region.

Likewise, Eddie Yue, the Chief Executive of the HKMA, said last year that stablecoins act as a bridge between traditional finance and the virtual asset market.

He emphasized the importance of stability in stablecoins, especially if they become a preferred payment option for the general public, as this would further integrate the digital payment ecosystem with the real economy.

Hong Kong Expected to Approve Spot Bitcoin ETFs

Experts believe Hong Kong will greenlight spot crypto exchange-traded funds (ETFs) by the middle of this year.

Last month, Gary Tiu, the executive director and head of regulatory affairs at OSL, a Hong Kong-licensed cryptocurrency exchange, said OSL is in close communication with multiple fund companies, adding that five to ten firms are considering introducing a spot crypto ETF.

Tiu further indicated that some have made faster progress than others, raising the potential for the rollout of Hong Kong’s inaugural spot crypto ETFs by mid-2024.

Currently, the city state has listed several futures-based crypto ETFs, including the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF.

In another development, Hong Kong will host The Bitcoin Conference this year, local lawmaker Johnny Ng said in a recent post on X.

The Bitcoin conference, the world’s largest fintech conference, is coming to Hong Kong. Let’s paint the city orange! @thebitcoinconf @bitcoinmagazine

全球性大型的金融科技峰會比特幣峰會將會到香港舉辦，歡迎各位！#HongKong #bitcoin #ecosystem pic.twitter.com/yzKhB5BiBE

— Johnny Ng 吴杰庄 (@Johnny_nkc) January 22, 2024