Hong Kong’s Secretary for Financial Services and the Treasury, Christian Hui, has emphasized that retail stablecoin trading is not yet allowed in the city. In an online investment committee meeting on October 6, Hui discussed cryptocurrency regulation in Hong Kong and stated that the city has not adopted regulations for stablecoins like Tether (USDT) or USD Coin (USDC).
Stablecoins, which are digital currencies pegged to assets like the US dollar or gold, have been widely used by cryptocurrency service providers. Their value is designed to remain stable, providing a reliable trading asset. However, Hui noted that some stablecoins have experienced volatility issues in the past and, in some cases, even collapsed. Hui highlighted the importance of reserve management for stablecoins, as it directly affects the stability of investors’ ability to redeem fiat currencies.
Due to these risks, Hong Kong will not allow retail trading of stablecoins until proper regulations are in place. This decision aims to protect investors from potential losses and ensure a stable trading environment. Hui’s statement underlines the need for a comprehensive regulatory framework for stablecoins to safeguard the interests of retail investors.
During the same meeting, Hui also mentioned the case of JPEX, a local crypto exchange that was allegedly promoting its services without a license. The exchange was involved in a serious fraud case, further emphasizing the importance of stricter supervision and regulation of the cryptocurrency market in Hong Kong.
Cointelegraph reached out to Hong Kong’s Securities and Futures Commission (SFC) for clarification on stablecoin trading rules in the country. Pending a response from the regulator, further updates will be provided.
The JPEX case came to light a few weeks after Hong Kong regulators officially allowed retail investors to trade cryptocurrencies like Bitcoin (BTC) in early August 2023. This move aimed to facilitate greater participation in the cryptocurrency market for individual investors.
Looking ahead, the Hong Kong Monetary Authority is expected to introduce regulatory guidelines for the stablecoin market by the end of 2024. These guidelines will provide a clear framework for the operation and trading of stablecoins in Hong Kong, ensuring investor protection and market stability.
In conclusion, Hong Kong is taking a cautious approach to stablecoin trading, prioritizing investor protection and market stability. While retail investors are currently not permitted to trade stablecoins in the city, regulatory guidelines for the stablecoin market are expected to be introduced in the near future. These guidelines will establish a clear framework for the operation of stablecoins and provide a safer trading environment for investors.