Hong Kong Legislative Council Member Wu Jiezhuang: Stablecoin reserve assets may not be stored in Hong Kong, and plans to seek a compromise solution

The bill to regulate the issuance of stablecoins was submitted to the Hong Kong Legislative Council for consideration this week. Legislative Council Member, Web3 and Chairperson of the Subcommittee on Virtual Asset Development, Wu Kit-chuang, pointed out that stablecoins are the infrastructure of virtual assets, which can be used for cross-border transfer in addition to investment. They are an important tool for the public to participate in virtual assets. However, the current regulatory direction proposes that issuers place reserve assets in the custody of Hong Kong banks, which may not comply with the local regulations of individual currency merchants. They will step up communication with the government and the industry to seek compromise solutions, such as the two places formulating contracts or notes for mutual recognition, without requiring assets to be stored in Hong Kong.