Hong Kong has not yet adopted regulations for stablecoins like Tether (USDT) or USD Coin (USDC), according to the Secretary for Financial Services and the Treasury, Christian Hui. Retail investors in Hong Kong are currently not allowed to trade these assets due to the absence of specific regulations governing stablecoins.
Hui made these remarks during an online investment committee meeting, emphasizing the risks associated with stablecoins. While stablecoins are often pegged to the value of assets like the U.S. dollar or gold, some have experienced volatility or even collapsed in the past. Hui also pointed out that the reserve management of stablecoins significantly affects price stability and investors’ rights to redeem fiat currencies.
As a result, Hui stated that retail trading of stablecoins will not be allowed in Hong Kong until the country officially regulates stablecoins. It’s worth noting that the Hong Kong Monetary Authority is expected to introduce regulatory guidelines for the stablecoin market by the end of 2024.
Hong Kong Delays Regulation of Stablecoins, Citing Risks and Liquidity Concerns
The comments come in the wake of the JPEX case, a local crypto exchange that halted certain services in mid-September 2023, citing a liquidity crisis. This event led to a major scandal in the industry, with Hong Kong authorities launching an investigation following over 2,000 complaints from JPEX users reporting nearly $180 million in losses.
While Hong Kong has been progressing with cryptocurrency regulations, the status of stablecoins remains a topic of concern and discussion in the region, with authorities emphasizing the need for proper regulatory oversight.