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Companies in Hong Kong will no longer be allowed to promote or offer fiat-backed stablecoins to the public starting August 1 unless they have a license from the city’s financial regulator.
Violating this rule will be considered a criminal offense, with penalties of up to HK$50,000 (around $6,300) and a possible jail term of six months.
The Hong Kong Monetary Authority (HKMA) announced this new rule, known as the Stablecoin Ordinance, alongside a warning to investors on July 23. The regulator advised the public to avoid stablecoin offers that lack official approval.
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HKMA’s Chief Executive Eddie Yue explained that the rule is meant to reduce risk and build trust in the stablecoin market. He said that too many companies have been making announcements that lead to sudden price increases and high trading activity.
According to a Bloomberg report, as many as 50 firms are in the process of applying for a stablecoin license. Yue said many of these applicants contacted the HKMA directly.
However, most proposals lacked clear plans, and some were based only on ideas without showing how they would work. He noted that a number of applicants did not fully understand the risks or have the necessary skills to manage them.
While a few applications showed promise, many others lacked the necessary technical tools and financial planning to issue stablecoins properly. As a result, Yue stated that only a limited number of licenses will be issued initially.
Meanwhile, the Australian Transaction Reports and Analysis Centre (AUSTRAC) recently introduced a new strategy to tackle financial crime. How? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
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