Hong Kong Stable Currency Bill reads for the first time today, and the Bill summarizes the full text.

The first reading of the Hong Kong Stable Currency Bill today is as follows:

Part 1 - Introduction

Clause 1: sets out the short title of the Ordinance and provides for the commencement date
(1) This Ordinance may be cited as the Stabilization Ordinance.
(2) This Ordinance shall come into operation on a day to be appointed by the Secretary for Financial Services and the Treasury by notice published in the Gazette and the specific commencement date shall be specified in the notice published in the Gazette.

Clause 2: Defining terms used in the Ordinance
Includes, but is not limited to, specific definitions of specialized terms such as "majority shareholder controller," "minority shareholder controller," "corporation," "public," and "Exchange Fund."

Clause 3: Definition of Stable Currency
Stablecoins refer to digital currencies that are designed to maintain a stable value, usually by reference to fiat currency or other specific assets.

Clause 4: Definition of "specified stable currency
Stabilized Currency" means a Stabilized Currency issued by a Licensee that meets certain conditions.

Article 5: Definition of "Regulated Stabilizing Activities" and Related Terms
Regulated Stabilized Currency activities include, but are not limited to, activities such as offering, promoting, and trading in Stabilized Currency.

Part 2 - Regulation of activities involving specified stable currencies

Division 1 - Restrictions Involving Specified Stable Currency Activities

Section 8: Criminal liability for carrying on regulated stable money activities without a licence
It is an offence to conduct or purport to conduct regulated stable money activities without a license, punishable by a maximum fine and imprisonment. Offenders will be subject to a fine not exceeding $500,000 and/or imprisonment for a term not exceeding two years.

Section 9: Criminal liability for offering specified stable money without a licence
Offering or purporting to offer specified stable coins without a license is an offence and is subject to the same penalties as above.

Section 10: Criminal liability for unlicensed advertisement
It is an offence to advertise a regulated stablecoin activity or offer to provide a specified stablecoin without a license, with the same penalty as above.

Clause 11: Criminal liability for fraud or deception in relation to specified stable currency transactions
The maximum penalty is a fine of $1,000,000 and imprisonment for seven years.

Clause 12: Criminal liability for false statements
The offence of inducing a person to enter into an agreement relating to specified stable coins by means of a false statement is punishable as above.

Section 13: Monetary Authority to grant exemptions
The Commissioner may grant exemptions from sections 8, 9 and 10.

Division 2 - Licensing

Subdivision 1 - Grant of Licences

Section 14: Procedure for applying for a license
Applicants are required to submit necessary documents such as business plan, risk management strategy, etc. and must be a company or an authorized institution incorporated outside Hong Kong.

Section 15: Requirements for processing applications for licenses
The MA is required to consider the information submitted seriously and make a determination within a reasonable time, which should normally be within six months.

Section 16: Period of validity of license
Licenses are normally valid for one year and can be renewed. Licensees are required to apply for renewal three months before the expiry date.

Subdivision 2 - Licence Conditions

Clause 17: Power to attach conditions
The MA may attach appropriate conditions to a license, such as capital requirements, risk management measures and internal control systems.

Clauses 18 and 19: Procedure for adding or amending license conditions
Prior notice and hearing is required and the licensee has the right to object.

Section 20: Power to remove conditions
The Commissioner may, in consultation with the licensee, remove the relevant conditions when they are no longer necessary.

Subdivision 3 - Register of Licensees

Section 21: Maintenance of register of licensees
The Monetary Authority is required to maintain a register of licensees and make it accessible to the public.

Subdivision 4 - Duties of Licensees

Clauses 22 to 30: providing for licensee's obligations and related liabilities
These include payment of annual license fee, display of license number, compliance with minimum standards, notification to the Commissioner in case of material changes, and prohibition of continuation of activities after revocation of license.

Part 3 - Closing Period Requirements

Schedule 7: Terms relating to Winding-up Periods
Entities that fail to submit a license application by the due date or whose applications are rejected are required to wind up their business during the winding up period and the Commissioner may impose restrictions to ensure that the assets are properly handled.

Part 4 - Amendments to other enactments

To amend the relevant provisions of the Banking Ordinance, the Deposit Protection Scheme Ordinance and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance to include the regulation of currency stabilization activities.

Part 5 - Investigatory Powers

Clauses 116 to 121: Investigatory powers of the Monetary Authority
The Commissioner of Authorization directs investigators to conduct compliance investigations, and investigators may require relevant parties to provide documents and make statutory declarations, and non-compliance with the requirements of the investigation will be subject to criminal penalties.

Part 6 - Stabilization Tribunal

Clauses 141 to 145: Establishment and powers of Tribunal
The Monetary Stability Tribunal (MST) is responsible for reviewing specified decisions of the MA and enjoys the independence to enforce its decisions.

Other Important Terms

Section 102: Reserve Asset Management Requirements
The value of the reserve assets should not be less than the nominal value of the stable currency in circulation and should be of high quality and liquidity, and the policy should be open and transparent.

Section 103: Duty of licensee to provide redemption mechanism
Valid redemption requests must be honored without undue delay.

Section 104: Suitability of senior managers
A sound risk management control system needs to be put in place.

Section 105: Register of designated stable money entities
To facilitate public access to relevant information.

The full text of the Bill:https://www.aptosnews.com/b202412064.pdf