Unauthorized Promotion of Stablecoins to be Prohibited in Hong Kong
In a move to stabilise the emerging stablecoin market and protect investors from fraud and rampant speculation, the Hong Kong Monetary Authority (HKMA) has announced a new Stablecoin Ordinance. The ordinance, which takes effect on August 1, was issued by the HKMA's Chief Executive, Eddie Yue.
According to Yue's Wednesday statement, there has been a market frenzy, driven by enthusiasm generated by announcements about stablecoins, that has pushed stock prices and trading volumes to unjustified levels. To curb this euphoria, Yue expressed the need for further regulation.
The new Stablecoin Ordinance is aimed at protecting retail investors, with offenders facing up to six months in prison and fines reaching HK$50,000 ($6,300). The HKMA is the regulatory body responsible for the new ordinance, and it will oversee the licensing and operation of stablecoin issuers in Hong Kong.
On the day following Yue's statement, Bloomberg reported that approximately 50 companies had applied for stablecoin licenses. However, the search results do not provide specific information about who has applied for a license.
In addition to the ordinance, the HKMA also issued a public warning on Wednesday, advising investors to avoid unlicensed offerings to prevent legal risks. The government will impose penalties for promoting unlicensed stablecoins to retail investors.
The purpose of the new Stablecoin Ordinance is to regulate the use of stablecoins and provide a secure and transparent environment for investors. By doing so, the HKMA hopes to stabilise the market and protect investors from fraud and rampant speculation.
