The Hong Kong Monetary Authority (HKMA) recently completed a public consultation on stablecoins regulations.
As the city of Hong Kong prepares for mainstream adoption of digital assets through a regulated manner, the officials are grappling with cases of crypto-related scams. In a bid to ensure maximum protection of investors’ funds, Hong Kong’s Secretary for Financial Services and Treasury Christian Hui has noted that trading of retail stablecoins is not yet allowed. With the regulations of stablecoins in Hong Kong expected to take place late next year, Hui cautioned investors to tread cautiously with the retail stablecoins.
This comes after a local crypto exchange dubbed JPEX dipped investors millions of dollars and charged customers up to $1000 to facilitate withdrawals. Notably, JPEX duped investors of getting up to 30 percent in APY through stablecoins staking. Since the exchange advertised its services to novice traders through taxis, experienced investors were hardly touched as it was a direct scam that drained more than $180 million.
Another scam exchange causing thousands of victims losing their savings. 😔
JPEX is a small crypto exchange in Hong Kong that’s been offering nearly 30% APY on stablecoin staking.
They also have a exchange token $JPEX with $200 billion fully diluted value, advertising on Hong… pic.twitter.com/vns0QnMOpn
— Leon.sol (@leon_only1) September 14, 2023
Hong Kong and Digital Assets
The Hong Kong market has attracted both retail and institutional investors from the region seeking to get demo crypto exposure. Chinese banks have been reported to invest in the Web3 ecosystem through Hong Kong-based firms in a bid to play catch up with their Singapore counterparts. Moreover, the crypto asset industry has outperformed most traditional investment instruments including the bond and stock markets.
The Hong Kong Monetary Authority (HKMA) recently completed a public consultation on stablecoins regulations. As a result, the HKMA intends to issue a clear stablecoins regulatory framework before the end of 2024 to enable seamless adoption. The Hong Kong authorities intend to tap into the high demand for digital assets by most fintech startups within the region in a bid to boost its local economy.
The move by the Hong Kong authorities has caught most Western countries by surprise as a crackdown on digital assets-related firms continues in the United States following the collapse of FTX. As more crypto-related companies move away from the United States due to a lack of clear regulations, Hong Kong is opening its arms wide to all investors who are ready to comply with its crypto-related terms
Stablecoins Market Outlook
The stablecoins market has grown significantly in the past few years to a $123 billion valuation with an average 24-hour trading volume of approximately $24.5 billion. Tether (USDT), Circle (USDC), and TrueUSD (TUSD) are the top retail stablecoins that have stood the test of time, more so the bear market.
With more institutional investors entering the stablecoins industry, as shown by PayPal Holdings Inc (NASDAQ: PYPL) and its new product, PYUSD.
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