The impact of the new stablecoin regulations in Hong Kong: OTC trading volume plummets by 33%, and black market trading may rise?

CN
9 hours ago

On August 1, the highly anticipated Hong Kong "Stablecoin Regulation" officially came into effect, praised as "the world's strictest stablecoin legislation" due to its stringent real-name system and high thresholds. However, just one week after the new rules were implemented, their impact on Hong Kong's cryptocurrency over-the-counter (OTC) market quickly became apparent. According to Bitrace monitoring, the local OTC market in Hong Kong saw a 32.94% decline in scale within a week, and the daily average transfer volume of USDT from merchant addresses decreased by 43.20%. This not only raised concerns about compliance costs and user loss in the market but also indicated that some trading might shift underground, posing new challenges for regulation.

  1. The "Impact" of Hong Kong's New Stablecoin Regulations: Sharp Decline in OTC Trading Volume

The official implementation of the Hong Kong "Stablecoin Regulation" aims to bring credibility and stability to the stablecoin industry while protecting investors from fraud and excessive speculation. However, its stringent real-name requirements have had an immediate impact on Hong Kong's OTC market.

Dramatic drop in trading volume: According to Bitrace monitoring, after the stablecoin regulations took effect on August 1, the local OTC market in Hong Kong saw a 32.94% decline in scale within a week.

Significant reduction in USDT transfer volume: The daily average transfer volume of USDT from merchant addresses decreased by 43.20%, while non-merchant addresses saw a decrease of 30.65%. This indicates that the new regulations have significantly suppressed the daily use and circulation of stablecoins.

Some trading shifting underground: Bitrace analysis pointed out that some practitioners are turning to apply for licenses, while others may shift to underground trading, bringing new challenges for regulation.

  1. License Applications: Giants Compete, Fosun International Makes a High-profile Entry

Despite the impact of the new regulations on the OTC market, the appeal of Hong Kong's stablecoin licenses remains enormous, attracting numerous traditional giants and Web3 companies.

Fosun International makes a high-profile entry: On August 12, the Hong Kong-listed company Fosun International formed a team to apply for a Hong Kong stablecoin license. Founder Guo Guangchang personally led a visit to Hong Kong Chief Executive John Lee and Financial Secretary Paul Chan on August 6. Fosun's wealth sector has already ventured into Web3 business and is laying out RWA tokenization products through Xinglu Technology. Fosun Wealth has recently submitted trademark registration applications for "Xing Coin" and others.

Animoca Brands collaborates with Standard Chartered Bank: On August 8, Animoca Brands established a joint venture in Hong Kong with Standard Chartered Bank (Hong Kong) and Hong Kong Telecommunications (HKT) — Anchorpoint Financial Limited, aimed at building a business model focused on issuing and promoting licensed stablecoins. Anchorpoint has formally expressed its intention to the Hong Kong Monetary Authority, planning to apply for a stablecoin issuer license when the "Stablecoin Regulation" takes effect on August 1, 2025.

Fucheng Jin Technology actively applies: On August 11, comprehensive financial and digital technology service provider Fucheng Jin Technology announced that its wholly-owned Hong Kong subsidiary "Fucheng International Securities Futures Limited" has officially signed a commission agreement with a well-known compliance consultant in Hong Kong to apply for a Virtual Asset Service Provider (VASP) license and a Type 9 asset management license, planning to cover both traditional and virtual asset management businesses.

  1. RWA and Solana: Diversified Layout of Digital Assets in Hong Kong

While stablecoin regulation is tightening, Hong Kong has also made positive progress in RWA (Real World Assets) and the Solana ecosystem, demonstrating its diversified layout in the digital asset field.

RWA registration platform launched: On August 7, the RWA registration platform officially launched in Hong Kong, initiated by the Hong Kong Web3.0 Standardization Association, dedicated to achieving a comprehensive service system for the digitization, assetization, and financialization of RWA assets. On the same day, three standards in the Web3.0 field were initiated, including "RWA Tokenization Business Guidelines," "RWA Tokenization Technical Specifications," and "Blockchain-based Stablecoin Cross-border Payment Technical Specifications."

Zhongnong Rongxin lays out agricultural RWA: On August 8, Zhongnong Rongxin announced the launch of the country's first agricultural tokenized real asset (RWA) project, promoting the tokenization practice of Zhongnong Rongxin's core agricultural assets, utilizing blockchain technology to ensure clear ownership and eliminate issues such as double pledging and false valuation. Zhongnong Rongxin also announced a strategic cooperation with Aide Financial and will appoint Aide Financial as the sponsor for its Hong Kong IPO listing.

HashKey and OSL support Solana retail trading: On August 12, Hong Kong virtual asset exchange HashKey Exchange received approval from the Securities and Futures Commission, becoming one of the first compliant trading platforms to offer Solana (SOL) retail services. HashKey Exchange officially opened SOL retail trading services today and is the first compliant exchange in Hong Kong to support users in conducting SOL order book trading. On August 11, OSL HK's official website also announced that OSL has become the first digital asset trading platform in Hong Kong to support Solana (SOL) retail trading.

  1. Active Trading of Virtual Asset ETFs: Market Recognition Continues to Rise

Despite the setbacks in the OTC market, trading of virtual asset ETFs listed in Hong Kong remains active, indicating strong demand and recognition from investors for compliant crypto investment products.

Transaction data: On August 7, the total transaction volume of all virtual asset ETFs in Hong Kong was approximately HKD 14.86049 million. Among them, the Huaxia Ethereum ETF had a transaction volume of HKD 8.27011 million, performing outstandingly.

Conclusion:

One week after the implementation of the Hong Kong "Stablecoin Regulation," its impact on the OTC market is immediate, with trading volume plummeting nearly 33%, and some trading potentially shifting underground. This highlights the issues of compliance costs and user loss under stringent regulation. However, Hong Kong's proactive layout in stablecoin license applications, RWA, and the Solana ecosystem, along with the active trading of virtual asset ETFs, indicates its diversified development strategy in the digital asset field. Hong Kong is attempting to seek a balance between strict regulation and innovation, but how to effectively respond to the rise of underground trading and ensure its attractiveness as an international digital financial center will be significant challenges ahead.

Related: Animoca and Standard Chartered Bank Establish Stablecoin Joint Venture in Hong Kong

Original: “The Impact of Hong Kong's New Stablecoin Regulations: OTC Trading Volume Plummets 33%, Black Market Activity Feared to Rise?”

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