The rapid growth of cryptocurrencies and, in particular,
stablecoins, or digital assets pegged to traditional currencies, has drawn
attention from regulators worldwide, who fear they could put the financial
system at risk if not monitored.
The global market value of crypto assets stands at about
$2.2 trillion pointing to their growing inter-connectedness with the mainstream
financial system, said Eddie Yue, the Chief Executive of the Hong Kong Monetary
Authority (HKMA).
"We place emphasis on issues that may affect the
public's confidence in, and the safety, efficiency, and soundness of, our
payment systems, and accord appropriate priority to the protection of
users," the HKMA said in a paper on the topic.
It is seeking feedback from the public and stakeholders by
March 31, in a more wide-ranging effort than a recent exercise by the
territory's Securities and Futures Commission (SFC) that focused only on
trading platforms for virtual assets.
In its paper, the HKMA focused on the wider implications of
stablecoins that may be used in payments, along with aspects of investor
protection relating to crypto assets, and regulated institutions' interface
with crypto assets.
It listed five possible choices for regulating crypto
assets, ranging from no action to a blanket ban.
Regulated institutions are required to "critically
evaluate" their exposures to different types of risks and adopt
risk-mitigation measures before setting up ties with providers of crypto asset
services, the paper added.
The consultation comes against the backdrop of concerns
among policymakers worldwide that crypto assets could be used for illicit
purposes, or to take advantage of unsuspecting consumers.
Such worries stem from the complexity and volatility of
cryptocurrencies, as well as wildly varying standards around aspects of
disclosure, reserves and consumer protection. © Reuters
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