As Hong Kong moves forward in adopting cryptocurrency trading for retail investors, a local official has confirmed that retail stablecoin trading is not yet permitted.
The official made remarks about cryptocurrency regulation in Hong Kong during an online investment committee meeting on October 6, local news agency Ming Pao reported. mentioned.
Cryptocurrency service providers widely use stablecoins like USDT as a major trading asset because their value is designed to be stabilized by being tied to the US dollar or assets like gold, Hui said. However, the secretary noted that some stablecoins have encountered serious volatility issues or even collapsed in the past, adding that the management of stablecoin reserves greatly affects the price stability of investors’ rights to redeem fiat currencies.
Given these risks, retail stablecoin trading will not be allowed until Hong Kong officially regulates stablecoins, Hui announced.
Hui also stated that local cryptocurrency exchange JPEX – which was allegedly promoting its services in the region without a license – was involved in a serious fraud case, reflecting the need for higher supervision of the cryptocurrency market.
Cointelegraph has reached out to the Hong Kong Securities and Futures Commission to inquire about stablecoin trading rules in the country. This article will be updated pending new information from the regulator.
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JPEX suspended some services on its platform as of mid-September 2023, citing a liquidity crisis caused by “unfair treatment” from some institutions in Hong Kong. JPEX quickly became the center of a major industry scandal, with Hong Kong authorities launching an investigation after receiving more than 2,000 complaints from JPEX users who reported losses worth nearly $180 million.
The JPEX case came just weeks after Hong Kong regulators officially allowed retail investors to trade cryptocurrencies such as Bitcoin (BTC) in early August 2023. The Hong Kong Monetary Authority is expected to provide regulatory guidelines for the stablecoin market by the end of 2024.
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