Hong Kong officials say stablecoin rules may raise fraud risks and warn investors to stay alert.
- New stablecoin rules began in Hong Kong on August 1
- Some companies are using the rules to boost share prices
- Regulators will take action against misleading behavior
Authorities Urge Investors to Be Careful
A top official from the Hong Kong Securities and Futures Commission (SFC), Ye Zhiheng, has warned that new stablecoin rules could lead to more fraud. He said investors should not follow market hype or invest based on sudden price changes. Ye made this statement after some stablecoin companies saw their stocks drop in early August. These losses happened right after the new stablecoin rules started.
Companies Use License News to Boost Stock Prices
Ye mentioned that some companies raised their stock value just by saying they plan to apply for a stablecoin license. Analysts say the drop in prices was expected because of strict new requirements. Still, officials are concerned that fake announcements could mislead investors. The SFC and the Hong Kong Monetary Authority (HKMA) said they will monitor the market closely. They will take strong action against anyone trying to trick investors or move prices unfairly.
New Laws Make Compliance Mandatory
The Stablecoin Ordinance began on August 1. It introduced a six-month period for companies to meet the new rules. It is now illegal to offer stablecoins linked to regular currencies to everyday investors without a license. The rules apply to promotions as well. Hong Kong aims to keep its crypto space safe and clear. Regulators have created a public list of licensed stablecoin issuers.
Tighter Rules for Crypto Companies
In addition to stablecoin laws, the SFC recently updated its rules for how cryptocurrency is stored. New guidelines ban the use of smart contracts in cold wallets and set rules to improve security. This change could affect how some crypto firms operate in the city. It also shows that Hong Kong is putting crypto under tighter control.
Source: cointelegraph.com
