Hong Kong’s financial echelons are poised to unveil the findings of a pivotal stablecoin consultation report, marking a significant stride in the region’s legislative framework to regulate the burgeoning industry.

In a recent communiqué, the Financial Services and the Treasury Bureau (FSTB) disclosed its imminent plan to publish the outcomes of a December consultation regarding stablecoin issuers. This initiative aims to craft a legislative draft to be presented to the Legislative Council. During the consultation period, regulators suggested that all issuers of fiat-referenced stablecoins should be mandated to procure a license from the Hong Kong Monetary Authority (HKMA), the region’s principal monetary institution, which co-authored the consultation.

The FSTB’s statement further delineated that only specific entities — including licensed stablecoin issuers, sanctioned institutions such as banks, licensed corporations, and approved crypto trading platforms — would be permitted to retail fiat-referenced stablecoins.

Read more: The Stablecoin Renaissance: Reshaping a Multi-Trillion-Dollar Market

The legislative blueprint also proposes comprehensive oversight on stablecoin issuers, focusing on aspects such as reserve management, stability mechanisms, redemption processes, and governance structures.

This regulatory proposition follows the HKMA’s introduction of a stablecoin issuer sandbox in March, designed to pave the way for forthcoming regulations. Eddie Yue, the HKMA’s Chief Executive, articulated at the time that the sandbox would assist in “shaping fit-for-purpose and risk-sensitive regulatory frameworks, which are crucial for fostering the sustainable and responsible evolution of the stablecoin issuance landscape.”

Vincent Chok, the CEO of First Digital, issuer of the FDUSD stablecoin, remarked to The Block in March about the “substantial” market demand. He noted, “We are aware that numerous entities are eagerly awaiting the opportunity to apply for this Hong Kong stablecoin licensing.