The Hong Kong Monetary Authority (HKMA) recently completed a public consultation on stablecoin regulations.
As the city of Hong Kong prepares for mainstream adoption of digital assets in a regulated manner, authorities are grappling with cases of crypto-related scams. To ensure maximum protection of investors’ funds, Christian Hui, Hong Kong’s Secretary of Financial Services and Treasury, notes that trading of retail stablecoins is not yet permitted. With regulation of stablecoins in Hong Kong expected late next year, Hui cautioned investors to tread carefully with retail stablecoins.
This comes after a local crypto exchange called JPEX duped investors into sinking millions of dollars and charged customers up to $1000 to facilitate withdrawals. Specifically, JPEX duped investors into receiving up to 30 percent in APY through stablecoin staking. Since the exchange advertised its services to novice traders through taxis, experienced investors were hardly touched as it was a downright scam that resulted in the withdrawal of over $180 million.
Thousands of victims lost their savings due to another scam.
JPEX is a small crypto exchange in Hong Kong offering around 30% APY on stablecoin staking.
They also have exchange tokens $jpex Advertisement on Hong Kong, with a totally undervalued value of $200 billion… pic.twitter.com/vns0QnMOpn
– leon.sol (@leon_only1) 14 September 2023
Hong Kong and digital assets
The Hong Kong market has attracted both retail and institutional investors from the region looking to gain demo crypto exposure. Chinese banks are reported to be investing in the Web3 ecosystem through Hong Kong-based firms to catch up with their Singapore counterparts. Furthermore, the crypto asset industry has outperformed most traditional investment instruments, including bond and stock markets.
The Hong Kong Monetary Authority (HKMA) recently completed a public consultation on stablecoin regulations. As a result, the HKMA intends to issue a clear stablecoin regulatory framework before the end of 2024 to enable seamless adoption. Hong Kong authorities intend to take advantage of the high demand for digital assets fueled by the region’s majority fintech startups to boost its local economy.
The move by Hong Kong authorities has surprised most Western countries as the crackdown on digital asset-related firms continues in the United States. ftx, As more crypto-related companies are moving away from the United States due to the lack of clear regulations, Hong Kong is opening its arms to all investors who are willing to abide by its crypto-related stipulations.
Stablecoins Market Outlook
The market for stablecoins has grown significantly over the past few years to a valuation of $123 billion, with an average 24-hour trading volume of around $24.5 billion. Tether (USDT), Circle (USDC), and TrueUSD (TUSD) are top retail stablecoins that have stood the test of time, especially in bear markets.
More institutional investors are entering the stablecoin industry, as shown PayPal Holdings Inc (NASDAQ: PYPL) and its newest offering, PYUSD.
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