#HongKongPlansNewVAGuidelines White House Talks on Stablecoin Yields: 5 Key Points from the Negotiations
High-stakes meetings are underway in Washington to determine the future of the CLARITY Act. Here is the breakdown of where things stand:
1. The Core Disagreement: To Yield or Not to Yield?
The primary sticking point is whether stablecoin holders should earn interest.
· Crypto Industry: Argues that banning yield stifles innovation and consumer choice.
· Banking Sector: Fiercely opposes the idea, warning it would function like unregulated bank deposits and drain billions from the traditional system.
2. The Timeline Pressure
Patrick Witt, President Trump's crypto advisor, is pushing for a compromise by the end of February. With the 2026 mid-terms approaching, the window for passing the CLARITY Act is "rapidly closing." If Democrats were to regain the House, the current negotiations could be rendered irrelevant.
3. The $500 Billion Question**
The fear from traditional finance is substantial. Analysts at Standard Chartered estimate that if yield-bearing stablecoins are permitted, they could pull **$500 billion in deposits out of U.S. banks by 2028.
4. A Concession on the Table
In an effort to get a deal done, the crypto industry (via groups like the Digital Chamber) has signaled a major compromise: they are willing to give up "static holding rewards" (similar to savings account interest) to appease regulators.
5. The Red Line for DeFi
While giving up static yield, the industry is holding firm on protecting rewards for specific on-chain activities, such as providing liquidity. This is considered crucial for the survival of decentralized finance (DeFi) protocols.
Hong Kong is moving from temporary measures to a permanent, comprehensive licensing framework for virtual assets. Here are the critical updates:
1. Dedicated Licenses (No More "Bolt-Ons")
The SFC is scrapping the old "uplift" conditions applied to traditional finance licenses. New amendments to the AMLO will introduce dedicated licenses specifically for VA dealers, custodians, advisors, and asset managers.
2. Full-Spectrum Regulation
The new rules aim to cover the entire value chain. Guidelines will address:
· Custody: Enhanced rules for the segregation and protection of client assets.
· Trading: Stricter criteria for platform operators regarding surveillance and market integrity.
· Advice: Clear conduct rules for advisors serving retail clients.
3. Integration of Stablecoin Rules
Following the recent stablecoin sandbox launches, the new legislative package will integrate oversight for issuers, ensuring they meet strict reserve and redemption requirements.
4. Boosting Market Liquidity
In a strategic pivot to stimulate growth, the government is considering tax incentives and streamlined listing processes to attract global trading platforms and liquidity providers to the city.
5. Targeting Institutional Capital
The overarching goal of this framework is to create a safe, regulated environment that attracts institutional capital. By establishing a clear rulebook, Hong Kong aims to become the blueprint for other major financial hubs looking to regulate digital assets
