Hong Kong’s stablecoin regulatory framework limits their use for derivatives buying and selling on blockchain networks, based on Sebastian Paredes, CEO of DBS Hong Kong.
In response to a Friday report by native information outlet The Customary, Paredes mentioned that Hong Kong regulations on stablecoin Anti-Money Laundering (AML) and Know Your Customer (KYC) necessities will considerably prohibit their use for onchain derivatives buying and selling. He mentioned the financial institution would monitor developments, however focus as a substitute on constructing broader stablecoin capabilities in Hong Kong.
His feedback adopted the rollout of Hong Kong’s new stablecoin guidelines on Aug. 1. The foundations instantly criminalized the promotion of unlicensed stablecoins and established a public registry of authorized issuers.
Others have additionally criticized Hong Kong’s stablecoin guidelines as overly harsh. When the framework was launched, stablecoin companies operating in Hong Kong posted double-digit losses, attributed to stricter guidelines than anticipated.
Associated: Animoca and Standard Chartered form stablecoin venture in Hong Kong
DBS isn’t new to crypto
The native DBS department is a significant financial institution in Hong Kong and holds practically 492 billion Hong Kong {dollars} ($63.2 billion) as of final 12 months, based on regulatory filings. DBS can be the biggest financial institution in Southeast Asia by property, totaling $842 billion Singapore {dollars} ($620 billion).
The financial institution has lengthy been concerned with blockchain know-how and the crypto trade. Earlier this month, DBS, Franklin Templeton and Ripple joined forces to launch tokenized trading and lending services for institutional traders, leveraging the XRP Ledger.
In late August, DBS additionally determined to expand its digital asset offerings with the launch of tokenized structured notes on the Ethereum blockchain. The financial institution is not any stranger to stablecoins, being responsible for managing the US dollar reserve of the Global Dollar (USDG).
In late 2024, DBS additionally introduced a new suite of blockchain-powered services for its institutional shoppers and introduced the offering of over-the-counter crypto options. The financial institution additionally launched an answer final 12 months that makes use of blockchain technology to streamline the disbursement of government grants.
Associated: Asia’s OSL Group raises $300M for stablecoin and global expansion
Hong Kong’s stablecoin hiccups
Hong Kong was buzzing with stablecoin exercise each earlier than and after the native regulators adopted the brand new framework. When the principles, strict as they had been, got here into power, a Hong Kong Securities and Futures Fee (SFC) official warned that the brand new native stablecoin regulatory framework had increased the risk of fraud.
The assertion was largely motivated by the speculative frenzy round corporations that introduced their curiosity in acquiring stablecoin licenses. Reviews that HSBC and ICBC considered applying for stablecoin licenses had been adopted by options that the corporations backed away underneath stress from Chinese language authorities.
In early August, Chinese language authorities instructed native corporations to cease publishing research or holding seminars related to stablecoins.
This was adopted by a since-removed report from main native monetary information outlet Caixin that mainland Chinese firms operating in Hong Kong may be forced to withdraw from cryptocurrency-related actions.
Journal: China mocks US crypto policies, Telegram’s new dark markets: Asia Express
