HK stablecoin stocks slump – Michael West
Shares of cryptocurrency-related businesses listed in Hong Kong fell after China’s central bank vowed to crack down on virtual currencies and cited concerns about stablecoins.
The People’s Bank of China (PBOC) on Saturday warned of a resurgence in crypto speculation and vowed to crack down on illegal activities involving stablecoins.
Liu Honglin, founder of Man Kun Law Firm, said that this statement “eliminates all kinds of uncertainty, speculation and illusions” around China’s stablecoin policies.
“Regulators have drawn a concrete red line on what used to be a vague boundary line.”
Shares of Yunfeng Financial Group, which has expanded into cryptocurrency and tokenization businesses, fell more than 10 percent in early trading, putting them on track for their worst day in two months.
Bright Smart Securities and Commodities Group fell nearly seven percent and digital asset platform OSL Group lost more than five percent.
Interest in virtual currencies surged after Hong Kong passed a stablecoin bill in May, creating a legal framework for fiat-based cryptocurrency as the city looks to become a digital asset hub.
The excitement also spread to China, where cryptocurrency trading has been banned since 2021.
The PBOC statement, issued after a meeting attended by 13 government agencies, highlighted concerns about stablecoins in particular, stating that they fail to meet customer identification and anti-money laundering controls requirements.
In September, sources told Reuters that China’s securities watchdog had advised some local brokers to halt their real-world asset tokenization businesses in Hong Kong.
Chinese tech firms including Alibaba-backed Ant Group and e-commerce company JD.com have paused plans to issue stablecoins in Hong Kong after the PBOC expressed concerns about the rise of privately controlled currencies, the Financial Times reported in October.
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