Hong Kong Legislator Questions Transparency of HKMA Stablecoin Sandbox

Hong Kong’s ambitious push to become a global hub for virtual assets and Web3 technologies has hit a potential snag as questions arise about the transparency of its regulatory sandbox for stablecoin issuers. As the city’s financial authorities take steps to create a comprehensive framework for cryptocurrency regulation, a prominent legislator has voiced concerns about the opacity surrounding the HKMA recent sandbox initiative.

Hong Kong’s Stablecoin Sandbox Transparency Concerns

A Legislative Council member Darwin Chiu has voiced concerns about the transparency of the HKMA stablecoin issuer sandbox program. The HKMA launched the sandbox in March and recently announced that three groups of institutions have been selected for the first round of testing.

Chiu highlighted a perceived lack of transparency in the application process, specifically regarding the sandbox’s launch timing and the expected duration before official licensing. These concerns come as Hong Kong aim to establish itself as an international virtual asset hub, following the introduction of its virtual asset trading platform supervision system.

The Treasury Bureau has stated that regulatory proposals for stablecoin issuers are being finalized based on earlier public consultations. The government plans to submit draft regulations to the Legislative Council by year-end, with the goal of implementing the regulatory system as soon as possible.

Deputy Director of the Treasury Bureau, Chen Haolian, emphasized that the licensing system for fiat currency stablecoin issuers will align with their virtual asset regulatory framework with international standards. The system will include a six-month transitional “non-violation period” for existing issuers with substantial business operations.

Legislator Wu Jiezhuang called for the government to publish a Web3 development roadmap within the year to provide direction for the industry and boost investor confidence. As they continue to develop its Web3 and virtual asset ecosystem, lawmakers are urging for increased clarity and transparency in the regulatory process. The stablecoin sandbox program represents a crucial step in this direction, but questions remain about its implementation and long-term impact on the sector.

Also Read: Bitwise CEO Discloses Huge Bitcoin ETF Buying By Large Bank In US

Launch of Bitcoin Inverse Product

In a related development, the Hong Kong Stock Exchange (SEHK) is set to launch Asia’s first Bitcoin inverse product on Tuesday, July 23. This launch coincides with the introduction of the Spot Ethereum ETF in the United States on the same day. The CSOP Bitcoin Futures Daily (-1x) Inverse Product, managed by CSOP Asset Management Limited, is designed to provide sophisticated investors with a new tool for short-term trading or hedging.

This futures-based investment vehicle targets the inverse (-1x) of the daily performance of the S&P BTC Futures Index. It achieves this by investing in short positions of Bitcoin futures traded on the Chicago Mercantile Exchange (CME), including both standard and micro Bitcoin futures. HSBC Institutional Trust Services (Asia) Limited serves as the trustee for this product.

Also Read: ETH Supply Surge Casts Shadow on Spot Ethereum ETF Excitement