Hong Kong to Test Run Stablecoin with Standard Chartered Bank, Animoca Brands

Hong Kong, an upcoming crypto hub, has proposed a pilot for its stablecoin, starting with major brands such as Standard Chartered Bank and Animoca Brands.

 The Hong Kong Monetary Authority — the de facto central bank — on Thursday announced the stablecoin sandbox and the initial participants in the trial of operational plans for stablecoin issuance “with a view to formulating a fit-for-purpose and risk-based regulatory regime.”

Other participants for the first batch will come from Jindong Coinlink Technology, RD InnoTech, and Hong Kong Telecommunications for the first batch. HKMA however warned that it was not allowed to solicit funds from the public yet.

No Public Funds 

Speaking on the trial, deputy chief executive of HKMA, Daryl Chan stressed that the sandbox participants must not raise funds from the public or offer investment products in the name of the sandbox. “[They] cannot use the general public’s funds at the initial stage of their testing,” Chan said.

“Stablecoins, as a possible medium for payments, will not only lower costs and reduce transaction time, but also provide various innovative solutions by leveraging their programmability feature,” Chan added. “They will generate more automated and ‘smarter’ financial services, thereby facilitating fund flows and enabling better management of risks associated with the transactions.”

The use cases that will be used within this trial include payments, supply chain management, and further applications in capital markets. The successful issuance of this stablecoin will set the standard for all future fiat-referenced stablecoin issuers to obtain a license from the HKMA.

The HKMA says it will continue to process the applications for the sandbox, urging applicants to come up with specific plans for the issuance, distribution, and redemption of the stablecoin.

“It should be emphasized, though, that sandbox participation is not a prerequisite for the application for a stablecoin issuer license in future,” Chan said. “Sandbox participants that intend to apply for a license later on will still need to submit a formal application when the regulatory regime comes into effect.”

Hong Kong Driving Crypto Innovation

Hong Kong has positioned itself as a leader in crypto innovation, especially in South East Asia. the administrative region of China first of all flung open its doors to crypto companies to come establish businesses.

Since then, many crypto companies have relocated to the city and more are doing the same. Hong Kong has also become the first in the region to approve Bitcoin ETFs. With this trial for a stablecoin, it is also setting the pace for another advancement in the crypto space.

After the first batch of participants, the HKMA will include more participants which could include the public as it looks to launch a space for stablecoins.