The announcement today by the Hong Kong Government prohibiting the offer and active marketing of unregulated stablecoins, such as USDC and USDT, is an important catalyst to propel digital assets as a mainstream medium of exchange across financial markets. This decision is likely to establish a precedent for other Tier 1 and 2 regulated markets to restrict the use of unregulated stablecoins. Limiting their utility and interoperability significantly. Potentially shifting the TVL towards regulated stablecoins issued by licensed non-bank financial institutions and regulated banking entities. Which will increase the safety and soundness of using these instruments as digital currency settlement rails. Thereby, facilitating increased adoption and innovation on Web3. Whilst also establishing Hong Kong as the hub of digital asset best practices in Asia. More Details about the announcement in a client alert published today by Henry Yu at L&Y Law Office in HK The Stablecoins Bill (the “Bill”) with respect to the introduction of a regulatory regime (the “Stablecoins Regime”) for the issuance and offering of fiat-referenced stablecoins (the “Specified Stablecoins”), to be supervised and administered by the Hong Kong Monetary Authority (the “HKMA”), was published in the Gazette on 6 December 2024 and introduced into the Legislative Council for first reading on 18 December 2024.   In this Client Alert, we summarise the key features and updates introduced by the Bill and share our observations on the subject. In particular:   (1)        Existing issuers of Specified Stablecoins in Hong Kong are recommended to start taking steps to comply with the applicable regulatory requirements and to apply for the stablecoin issuer licence as soon as practicable upon the commencement of the Stablecoins Regime in order to enjoy the full benefit of the transitional arrangements under the Bill;   (2)        Upon the commencement of the Stablecoins Regime, unlicensed virtual asset over-the-counter (“VA OTC”) service providers may not be able to offer Specified Stablecoins in Hong Kong (at least until the proposed VA OTC licensing regime comes into effect); and   (3)        The offer and active marketing to the Hong Kong public of Specified Stablecoins that are issued by issuers which are not licensed by the HKMA under the Stablecoins Regime (potentially including USDT, USDC and other widely circulated stablecoins issued overseas) may be prohibited. #stablecoins Tether.io Circle #crypto #hongkong #web3 #defi #pulse Hong Kong Monetary Authority (HKMA) Securities and Futures Commission (SFC) #blockchain OKX Binance OSL Hashkey World Web3 Harbour The Wall Street Journal CoinDesk