Hong Kong: no plans for central bank digital currency

The Acting Secretary for Financial Services and the Treasury has said that CBDC would be less useful in Hong Kong, compared to other jurisdictions

What has happened?

A high-level official has revealed that the Hong Kong Monetary Authority (HKMA) is not currently planning to issue a central bank digital currency (CBDC).

What does this mean?

During a meeting of the Legislative Council in Hong Kong last week, Joseph Chan, Acting Secretary for Financial Services and the Treasury, said that the HKMA's research on the topic had led to the belief that a CBDC would be less useful in Hong Kong, compared to other jurisdictions.

Responding to questions raised by legislator Denis Kwok earlier in May, Chan said:

"The HKMA has carried out research on CBDC. At the same time, the HKMA notes that the benefits of CBDC and its efficiency gains will depend on the actual circumstances of a jurisdiction. In the context of Hong Kong, the already efficient payment infrastructure and services make CBDC a less attractive proposition. The HKMA has no plan to issue CBDC at this stage but will continue to monitor the international development."

Chan added that the anonymous nature of holding and transacting cryptocurrencies poses potential money laundering or terrorist financing risks.

On whether any plans were afoot to enact legislation to regulate the issuance, trading and storage of cryptocurrencies, Chan said that, for the time being, the authorities will continue to monitor the development of initial coin offerings and cryptocurrencies in Hong Kong, and maintain close contacts with other regulators, while "taking appropriate measures to safeguard the interest of the investing public".

Chan also listed some of the actions taken by the Securities and Futures Commission (SFC), Hong Kong's regulator, to date.

For example, in September 2017, the SFC published a statement that explained that if digital tokens offered in an ICO were shares, debentures or interests in a collective investment scheme, they would be deemed securities.

More recently, in February 2018, the SFC took action against a number of cryptocurrency exchanges and issuers, cautioning them that they should not trade cryptocurrencies that were securities without a licence.

Next steps

If you want to take advantage of blockchain's huge potential and disruptive impact, while avoiding falling foul of ever-developing regulatory and legal requirements, visit our Hogan Lovells Engage Blockchain Toolkit.

Contacts
Mark Parsons
Partner
Hong Kong
Languages English
Topics Blockchain
Countries Hong Kong

 

© 2020 Hogan Lovells. All rights reserved. "Hogan Lovells" or the “firm” refers to the international legal practice that comprises Hogan Lovells International LLP,Hogan Lovells US LLP and their affiliated businesses, each of which is a separate legal entity. Attorney advertising. Prior results do not guarantee a similar outcome.