A Hong Kong Securities and Futures Commission (SFC) official warned that the introduction of the brand new native stablecoin regulatory framework has elevated the chance of fraud.
According to an Aug. 18 report by Chinese monetary information outlet Zhitongcaijing, Ye Zhiheng, government director of the intermediaries division on the SFC, stated that fraud dangers have elevated with the latest introduction of stablecoin rules. He urged traders to train warning and keep away from making irrational funding choices pushed by market hype or value momentum.
Ye’s remarks adopted stablecoin firms working in Hong Kong posting double-digit losses on Aug. 1, simply after the brand new stablecoin regulation got here into power. Analysts on the time described the sell-off as a wholesome correction, as the necessities for stablecoin issuers proved to be extra stringent than anticipated.
Still, Ye stated that some firms noticed their share costs rise just by disclosing plans to use for a stablecoin license.
Related: China cracks down on stablecoin promotions, analysis and seminars
Hong Kong authorities warn in opposition to stablecoin hypothesis
Last Thursday, the SFC and the Hong Kong Monetary Authority (HKMA) collectively issued a assertion on latest market actions associated to stablecoins. The regulators pointed to “latest abrupt market actions linked to the stablecoin idea” of firms.
“These actions seem to observe company bulletins, information studies, social media posts or speculations relating to plans to use for stablecoin issuer licence, have interaction in associated actions or discover the feasibility of such initiatives in Hong Kong,” the announcement stated.
The SFC additionally stated it’ll carefully monitor buying and selling actions in Hong Kong. The regulator plans to “take stringent actions in opposition to any manipulative or misleading practices that would compromise the integrity of the market.”
Related: Animoca and Standard Chartered kind stablecoin enterprise in Hong Kong
Crypto is a excessive precedence for Hong Kong regulators
The warnings come as Hong Kong begins implementing its Stablecoin Ordinance, which took impact Aug. 1 and launched a six-month transition interval for compliance.
The Stablecoin Ordinance successfully criminalizes the providing or promotion of unlicensed fiat-referenced stablecoins to retail traders. Those measures additionally adopted native authorities finalizing their regulatory framework for stablecoin issuers and launching a devoted public license registry.
Last week, the SFC additionally issued instantly efficient steerage on cryptocurrency custody requirements, introducing sweeping safety necessities and a ban on sensible contracts in chilly pockets implementations, a rule that would battle with present practices at a number of main corporations.
Magazine: Hong Kong hoses down stablecoin frenzy, Pokémon on Solana: Asia Express
