Hong Kong is beginning a consultation period on a new regulatory regime for stablecoin issuers in the city, the Hong Kong Monetary Authority (HKMA) announced Wednesday. 

The HKMA released a thirty-page consultation paper for public comment until Feb. 24. Under the framework outlined in the paper, stablecoin issuers operating in Hong Kong would need to obtain a license from the monetary authority. 

The consultation paper says stablecoin issuers should have “full backing” for all their circulating stablecoins. Notably, Terra’s algorithmic UST stablecoin was only partially backed before collapsing in mid-2022. The HKMA said UST’s de-peg “highlighted the urgency” of having…

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