Hong Kong to crack down on illegal stablecoins
Starting August 1, Hong Kong will begin enforcing the Stablecoins Ordinance, a new crypto law that criminalizes the promotion or offering of unlicensed fiat-referenced stablecoins (FRS) to the public.
Passed by the Legislative Council on May 21, the ordinance grants the Hong Kong Monetary Authority (HKMA) sweeping powers to penalize violations, reports Cryptopolitan.
Under the law, individuals or firms offering or advertising such stablecoins without a license could face fines of up to HK$50,000 (~US$6,300) and up to six months in prison. The legislation specifically targets activities under Sections 9 and 10, making both promotion and facilitation without approval criminal offenses.
HKMA to impose sanctions and reputational penalties
Beyond criminal penalties, the HKMA can impose a range of administrative actions, including fines, license suspensions, and executive disqualifications, per Part 6 of the ordinance. Section 133 allows for pecuniary penalties payable to the government, while Section 134 authorizes revocations of existing licenses for serious breaches. Section 135 ensures that public notices of violations will be issued, exposing offenders to reputational damage in addition to legal consequences. The regulatory body is expected to closely monitor stablecoin-related activity and act swiftly against unauthorized providers or advertisers.
Licensing competition intensifies amid digital asset hub ambitions
According to Bloomberg, more than 50 companies are preparing applications for stablecoin licenses as the August deadline looms. With only a limited number of licenses available, competition is fierce. High-profile applicants include state-backed Guotai Junan and ChinaAMC, a major asset manager that has already launched a tokenized yuan money market fund. The ordinance is part of Hong Kong’s broader effort to become a regulated digital asset hub, standing apart from Mainland China’s crypto restrictions. Since 2022, Hong Kong has rolled out crypto ETFs, retail trading permissions, and licensed exchanges, signaling its ambition to serve as a testing ground for digital finance in Greater China.
Recently we wrote that Tether is officially setting its sights on the U.S. market by launching a domestic stablecoin while bringing USDT into alignment with the new GENIUS Act.
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