Binance and HSBC are collaborating on regulations against stablecoins

Binance and HSBC are collaborating on regulations against stablecoins

Companies such as Alibaba, Binance and HSBC appear on a list released by the Hong Kong Monetary Authority (HKMA), which is studying regulations against stablecoins in the country.

A total of 58 companies participated in the consultation, according to a document Livecoins had access to, which shows that the scenario in the Asian country must undergo changes.

In general, the companies participating in the talks expressed support for the stablecoin regulation process.

Understand the point of regulation against stablecoins in Hong Kong

When LUNA collapsed, investors around the world lost all money tied to the currency, which was supposed to be stable, in a matter of days. The project’s algorithmic stablecoin was dollar-referenced and used on DeFi platforms.

However, when it suddenly broke, it proved it had no ballast and made it impossible for investors to exchange it for dollars. This is just one of the risks Hong Kong regulators want to mitigate in the stablecoin environment.

According to a report released this Tuesday (31) by the HKMA, it is clear that new regulations targeting stablecoins will start with those at the highest risk. However, over time, the market issuing such coins has to rely on inspections.

According to Eddie Yue, Executive Director of HKMA, interviewing companies proved to be important to better understand the market.

“An appropriate regulatory environment will help address the financial stability risks that may arise from stablecoins and promote the orderly and sustainable development of the sector. We thank the respondents for their valuable comments on the Cryptocurrency and Stablecoin Discussion Paper and their overall support for our recommended regulatory principles and guidelines. In preparing the specific regulatory agreements, the HKMA will take into account the feedback received, the latest market developments and international discussions. We also engage in dialogue with stakeholders and market parties. We expect to implement the regulatory agreements in 2023/24.”

The initial focus is on regulating stablecoin governance, issuance, portfolios and project stabilization. For example, algorithmic stablecoins can no longer operate in the country, with the new rules.

The goal now is to complete the work by 2024 at the latest, mitigating risks with stablecoins in Hong Kong. It is not clear whether a law will be needed in the country to ensure regulation, a measure that is still under study by the regulator.

See which companies participated in the discussions besides Binance and HSBC

In addition to Binance and HSBC, 56 other companies participated in talks to regulate the stablecoin market in Hong Kong.

For example, Visa and Mastercard were also large multinationals with an interest in stablecoins to participate in the consultation. In the cryptocurrency market, Ripple, Circle, Animoca, BitMint, Bitquant, Matrixport, among others, participated in the consultation.

Companies helping with regulation against cryptocurrencies in Hong Kong - Livecoins
Companies helping with regulation against cryptocurrencies in Hong Kong. Reproduction.
Companies helping with regulation against cryptocurrencies in Hong Kong - Livecoins
Companies helping with regulation against cryptocurrencies in Hong Kong, definitively. Reproduction.

Source: Live Coins

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