Cryptocurrency Regulation in Hong Kong
As Hong Kong advances in the adoption of cryptocurrency trading for individual investors, a local official emphasized that retail stablecoin trading is not yet allowed.
The remarks on cryptocurrency regulation in Hong Kong were provided during an online investment committee meeting on Oct. 6, according to the local news agency Ming Pao.
Stablecoins such as USDT are widely used as a major trading asset because their value is designed to be stabilized by the peg to United States dollars or assets like gold, Hui said. However, some stablecoins have experienced serious volatility issues or even collapsed in the past, the secretary noted, adding that reserve management of stablecoins significantly affects the price stability of investors’ rights to redeem fiat currencies.
Taking into account these risks, retail trading of stablecoins will not be allowed until Hong Kong officially regulates stablecoins, Hui reportedly declared.
JPEX Fraud Case Reflects Need for Higher Supervision of Crypto Market
Hui recently highlighted the case of JPEX, a local crypto exchange that was reportedly operating without a license and was involved in a major fraud case. This has prompted the need for better supervision of the cryptocurrency market.
Cointelegraph contacted the Hong Kong Securities and Futures Commission to inquire about the regulations surrounding stablecoin trading in the country. This article will be updated with more information from the regulator.
In mid-September 2023, JPEX suspended certain services on its platform due to a liquidity crisis that it attributed to “unfair treatment” from certain institutions in Hong Kong. This sparked an investigation by the Hong Kong authorities, with over 2,000 JPEX users filing complaints claiming losses of about $180 million.
In August 2023, the Hong Kong Monetary Authority enabled retail investors to purchase cryptocurrencies like Bitcoin (BTC), shortly before the JPEX case. The HKMA is anticipated to introduce regulations for the stablecoin market by the end of 2024, to facilitate further web 3.0 adoption and the development of the web 3.0 blockchain market.
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