Hong Kong wants to curb retail stablecoin trading amid crypto adoption

Hong Kong is considering measures to limit retail stablecoin trading for individual investors, according to a local authority in response to the growing acceptance of cryptocurrencies. It should be noted that retail stablecoin trading is currently not permitted in Hong Kong.

According to a local news agency, Ming Pao, in a live interview on the Investment Committee program on October 6, explained that the city has not yet been established by Hong Kong's Financial Services and Treasury Secretary Hui Ching-yu. Regulations governing the trading of stablecoins such as Tether (USDT) or USD Coin (USDC). As a result, retail investors are currently prohibited from engaging in such business activities in the country.

Stablecoins, cryptocurrencies that are tied to the value of a fiat currency such as the US dollar, are frequently used as key transactions by service providers to address market volatility.

However, some stablecoins have experienced high volatility and even collapsed, exemplified by the collapse of the TerraUSD (UST) stablecoin in May 2022, which highlights the critical role of maintaining price stability and investors' rights to redeem fiat. Currencies.

With these concerns in mind, retail trade will be allowed in the country after the regulator looks into the matter and officially issues stablecoins, according to Hui.

Hong Kong authorities are wary of the dangers of unregulated cryptocurrency platforms

Hui Ching-yu reflected that crypto activities in the country need to be monitored, citing the JPEX fraud case that is under investigation for fraudulent activities.

In another live interview, Xu Zhengyu, Secretary of Financial Services and SAR Government Treasury, emphasized the risks associated with unregulated platforms in the cryptocurrency space. These platforms often require more transparency and can operate without stability or reliability. In the event of disputes or platform failures, investors may have limited recovery of their funds and may suffer significant financial losses.

Xu Zhengyu went on to explain that investors who participate in such forums may seek avenues for complaints. When platforms go bankrupt, go out of business, commit fraud, breach contracts or experience security breaches, investors are more likely to lose their assets on these platforms.

As examples, he cited the FTX crash late last year and the recent JPX case in Hong Kong, highlighting the real-world consequences of unregulated cryptocurrency platforms.

The Hong Kong JPEX Scandal and Continued Efforts in Cryptocurrency Regulation

JPEX, a crypto exchange in Hong Kong, has suspended some services in mid-September 2023 due to liquidity problems caused by “unfair treatment” of certain institutions in Hong Kong. The exchange quickly became the center of a major scandal, with Hong Kong authorities launching an investigation after receiving more than 2,000 complaints from JPEX users, which resulted in a loss of nearly $180 million.

The JPEX issue comes a few weeks after Hong Kong regulators officially allowed retail investors to trade retail currencies as early as August 2023. However, Hong Kong police are making progress as they announce the arrest of 18 suspects linked to the cryptocurrency exchange scandal. .

Also, Hong Kong Security Secretary Chris Tang Ping-Keng assured the public that the police are fully committed to providing justice to those affected by the JPEX cryptocurrency exchange scam. Hong Kong Monetary Authority It is expected to introduce regulatory guidelines for the stablecoin market by the end of 2024.

Global attention is on cryptocurrency regulations. The cryptocurrency landscape in Hong Kong continues to be a dynamic and challenging arena for both regulators and aspiring businesses.

Hong Kong's efforts to regulate stablecoins suggest that the city is moving to create a safer and more secure environment for crypto investors. As Hong Kong adopts these innovative financial instruments, its priority is to protect investors and maintain the integrity of the market.