Raymond Yue, President of the Hong Kong Monetary Authority: The cooling of the stable currency still needs to be strengthened

On July 23rd, the Chief Executive of the Hong Kong Monetary Authority, Norman Chan, posted an article discussing stablecoins again. Yu Wai-man said that the discussion about stablecoins in the market and society over the past month still needs to be heated up and cooled down, and he also talked about how to implement the "Stablecoin Regulations" in accordance with the principles of stability and sustainability.

Yu Weiwen said that it is necessary to prevent excessive speculation on stablecoins by the market and public opinion. Recently, the following phenomena deserve attention. The first is excessive conceptualization. Yu Wai-man disclosed that, taking the experience of Hong Kong as an example, up to now, dozens of institutions have proactively reached out to the team of the Hong Kong Monetary Authority. Some have explicitly expressed their intention to apply for stablecoin licenses, while others are in a preliminary exploratory nature. However, many remain at the conceptual stage, such as proposing visions to enhance the efficiency of cross-border payments, support the development of Web3.0, and improve the efficiency of the foreign exchange market. But they lack practical application scenarios and are unable to put forward specific and feasible solutions and implementation plans, let alone possess the awareness and ability to manage risks. Some institutions that can provide application scenarios themselves lack the technology to issue stablecoins and the experience and ability to manage various financial risks. Yu Weiwen suggested that there could be multiple models for participating in stablecoins. For such institutions, a more practical approach seems to be to cooperate with other stablecoin issuers to provide application scenarios rather than pursuing to be the issuer.

Another more notable aspect is the trend of bubble formation. Yu Weiwen said that recently, with the hype around the stablecoin concept, the market has shown an overly excited mood. Some listed companies, regardless of whether their main business is related to stablecoins or digital assets, have seen their stock prices rise sharply, trading volumes increase significantly, and their company's reputation also rise greatly as soon as they claim to be interested in developing stablecoin business.

Yu Wai-man reaffirmed that the Hong Kong Monetary Authority had made it clear earlier that only a few stablecoin licenses would be issued in the initial stage, and advised investors to remain calm and think independently while digesting the so-called "positive" news in the market.

Yu Wai-man said that after the passage of the Stablecoin Ordinance, the Hong Kong Monetary Authority immediately solicited market opinions on the regulatory and anti-money laundering guidelines of the ordinance. Currently, it is appropriately adjusting the requirements of the guidelines based on the feedback and aims to publish them by the end of July. It is expected that the final version and the consultation draft will not undergo significant adjustments. Given the common concern of international regulation, more stringent requirements will be set in anti-money laundering to minimize the risk of stablecoins becoming money laundering tools, with the aim of ensuring the orderly and healthy development of the stablecoin market in Hong Kong.

In addition, Yu Wai-man said that a summary of the "Stablecoin Issuer Licensing Regime" will be released next week. The document will elaborate on the arrangements of the Hong Kong Monetary Authority for accepting and processing license applications.

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