The Hong Kong General Chamber of Commerce (HKGCC) has put forward recommendations for the upcoming budget, advocating the introduction of Chinese yuan-linked stablecoins as part of the region’s financial landscape. These proposals come amidst efforts to enhance Hong Kong’s economic environment and address manpower shortages.
The HKGCC, in a statement released on Tuesday, emphasized the potential benefits of allowing the issuance of stablecoins pegged to the Chinese yuan or backed by a diversified basket of fiat currencies, including the yuan, Hong Kong dollar, or U.S. dollar. Such a move, the chamber argues, could bolster Hong Kong’s financial ecosystem and facilitate smoother transactions within the region and beyond.
Virtual asset connect scheme
In addition to stablecoin proposals, the HKGCC urged the government to explore the implementation of a “Virtual Asset Connect Scheme,” with an initial suggested daily limit of approximately HK$20 billion ($2.5 billion). While details on this scheme remain scarce in the proposal, it is envisioned to integrate virtual assets into Hong Kong’s financial framework further.
The timing of these recommendations coincides with the impending budget address by the Financial Secretary later this month. The HKGCC underscores the importance of retaining and attracting talent and businesses to bolster Hong Kong’s overall operating environment, particularly in light of acute manpower shortages. These initiatives are seen as essential steps to ensure the region’s competitiveness on the global stage.
Regulatory framework and industry response
The proposals put forth by the HKGCC align with ongoing discussions within Hong Kong’s regulatory bodies. In December, the Hong Kong Monetary Authority (HKMA), the Financial Services, and the Treasury Bureau initiated a joint consultation paper addressing stablecoin issuance. According to the consultation paper, stablecoin issuers would be required to obtain licenses from authorities, reflecting a cautious approach to regulating this emerging sector.
Christopher Hui, Secretary for Financial Services and the Treasury, recently announced plans by the HKMA to introduce a sandbox environment to explore stablecoin issuance alongside industry stakeholders.
Eddie Yue, Chief Executive of the HKMA, has highlighted the potential role of stablecoins in bridging traditional finance with the virtual asset market. He emphasized the importance of stability in these digital assets, particularly if they are to gain widespread adoption as payment alternatives.
