Photo credit: HKMA

Hong Kong is moving further with its digital asset initiatives, announcing the first three participants of its stablecoin testing program a day after local regulators released conclusions on creating local stablecoin-related legislation.

The initial sandbox participants include a coalition formed by banking giant Standard Chartered’s Hong Kong entity, Web3 venture capital firm Animoca Brands, and Hong Kong Telecommunications (HKT), alongside local tech firms Jingdong Coinlink Technology and RD InnoTech, the Hong Kong Monetary Authority (HKMA) announced on July 18. These participants were chosen based on their plans and ability to operate within a limited scope and risk-controlled environment.

The sandbox participants are now authorized to test their proposed business models within an HKMA-prescribed scope. However, they are prohibited from handling funds in the initial stage and seeking financing from the public. They also cannot offer any products related to activities within the testing program.

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Darryl Chan, deputy chief executive of the HKMA, explained that the agency is prioritizing stablecoin projects that can address real-world issues and contribute to the Hong Kong economy:

“A key consideration is the need to propose concrete use cases for the stablecoin to help address pain points in economic activities and create value and new opportunities for our economy and financial services.”

This initiative follows recent policy conclusions on stablecoins from the HKMA and the Financial Services and the Treasury Bureau (FSTB). After months of public input, these financial institutions are incorporating feedback into their final legislative proposal. The general consensus from public feedback is that a regulatory framework is needed for fiat-backed stablecoins to manage potential financial risks and ensure transparency.

Read more: Hong Kong legislator seeking crypto, Web3 policy recommendations