The Hong Kong Monetary Authority (HKMA) has warned investors that it has not approved any stablecoin issuers in Hong Kong. The regulatory body has labelled the marketing of the products as illegal.
According to reports, no stablecoins pegged to the offshore yuan have been approved for issuance in the city.
This marks the first test of Hong Kong’s new regulatory regime for stablecoin issuers, which took effect in August. The regulations have made it hard for issuers to get a piece of the rapidly expanding market by imposing stringent requirements on them around licensing, capital, and governance.
AnchorX stablecoin challenged in Hong Kong
A Hong Kong company called AnchorX launched an offshore yuan stablecoin last week. The company said it had a stablecoin license from Kazakhstan’s Astana Financial Services Authority.
The company said it was meant to make it easier for Chinese companies that do business outside of China and countries that are part of the Belt and Road Initiative to send and receive money across borders. AnchorX also said it planned to explore the use of AxCNH in digital-asset trading and real-world asset (RWA) tokenization.
Meanwhile, the growing interest in stablecoins and tokenizing RWA has led to a market boom in digital assets in Hong Kong. There are now a lot of RWA projects, and the share prices of companies starting digital-asset projects are going up.
However, amidst the excitement, the mainland’s securities watchdog, the China Securities Regulatory Commission (CSRC), was said to have told some Hong Kong brokerages to stop tokenization operations to improve risk management.
Augustine Fan, head of insights at local digital-asset trading firm SignalPlus, said that efforts to combine crypto with traditional finance recently “pulled back” in the city. This was because people in the industry rushed to launch crypto projects and narratives without building the necessary infrastructure.
He also said that regulators wanted companies to focus on the real-world economic applications of new technology rather than activities that merely leveraged “a hot trend.”
Europe is set to challenge the US stablecoin dominance
According to on-chain data, the stablecoin market is up 6% hitting a new all-time high of $294.76 billion in the last 30 days. The thriving market has 192 million holders. In addition, as reported by Cryptopolitan, stablecoins saw a 1.46% increase in volume in the last seven days, worth $256 billion.
Tether’s USDT continues to dominate the market, having around $173 billion in market capitalization and accounting for roughly 59% of the entire sector. Circle’s USDC followed with a roughly $73.6 billion market cap, and USDe has around $14.432 billion market capitalization.
Still, many top US financial firms have been preparing to launch their own dollar-backed crypto tokens after President Donald Trump signed the GENIUS Act that could further cement US hegemony.
Meanwhile, experts are advocating for Beijing to advance the development of stablecoins pegged to the offshore yuan. They say that this could make it easier for investors around the world to use the Chinese currency and make Hong Kong a stronger international financial center.
On the other side of the world, a total of nine European banks, including ING and UniCredit have said that they are forming a new company to launch a euro-denominated stablecoin. This is a move they hope will help counter US digital market dominance.
While global stablecoin issuance stands at nearly $300 billion, euro-denominated stablecoins totaled just $620 million. The European banks’ new Amsterdam-based company is expected to launch its stablecoin in the second half of next year.
Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.
Source: https://www.cryptopolitan.com/hong-kong-goes-unregulated-stablecoin/
