Hong Kong Treasury Secretary Indicates Stablecoin Trading Still Unapproved Amid Rising Crypto Scrutiny
Summary:
As Hong Kong works towards enabling individual cryptocurrency trading, Financial Services and Treasury Secretary Christian Hui has declared that retail stablecoin trading remains unauthorized. This comes amid heightened scrutiny of the cryptocurrency market following the fraud case involving local crypto exchange JPEX which operated without a license. Regulatory guidelines for stablecoins are anticipated from the Hong Kong Monetary Authority by the end of 2024.
In the midst of Hong Kong's progression towards permitting individual investors to trade in cryptocurrencies, an official underscored that the trading of stablecoins on a retail level is still unapproved. Stablecoins, like Tether (USDT) and USD Coin (USDC), have not been regulated by Hong Kong yet, indicating that individual investors cannot involve in such assets trading currently, as noted by Hong Kong's Financial Services and Treasury Secretary, Christian Hui.
During a virtual meeting of the investment committee on October 6, Hui spoke about the country’s stance on cryptocurrency regulation, according to reports by local news agency Ming Pao. He stated that stablecoins, such as USDT, are popular trading tools among cryptocurrency service providers, because they're designed to have their value tethered to the US dollar or similar assets like gold. However, he noted that there have been cases where stablecoins have experienced considerable instability, even to the point of collapse. The impact of stablecoin reserves on the price stability of investor’s right to redeem fiat currencies was also emphasized by the secretary.
Given the inherent risks, Hui stated that trading stablecoins retail will not have authorization until Hong Kong imposes regulations on stablecoins. Another issue raised by Hui was the case of the now-defunct local cryptocurrency exchange, JPEX, which was alleged to have been promoting its services in Hong Kong without a valid license and was wrapped up in a significant fraud case. This highlights the requirement for more stringent oversight of the cryptocurrency market.
A request for details on stablecoin trading legislation in Hong Kong has been made to Hong Kong's Securities and Futures Commission by Cointelegraph. Relatedly, the JPEX case emerged not long after Hong Kong's regulatory authorities gave the green light for individual investors to trade in cryptocurrencies like Bitcoin in early August 2023. By the close of 2024, the Hong Kong Monetary Authority is speculated to put forth framework guidelines for the stablecoin market. This story will be refreshed as soon as any news is received from the regulatory body.
It's worth noting that due to what it described as "unjust treatment" by certain Hong Kong institutions, which spawned a liquidity crunch, JPEX suspended certain services on its trading platform in mid-September 2023. JPEX soon found itself at the heart of a major scandal with authorities launching an investigation after more than 2,000 JPEX users registered complaints reporting nearly $180 million in losses.
Published At
10/6/2023 10:12:00 AM
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