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Hong Kong financial affairs chief vows to move ahead with regulating stablecoins, over-the-counter crypto trading

  • The government will submit a bill on licensing rules for stablecoin issuers and OTC trading services to the legislature ‘as soon as practicable’
  • Hong Kong police have arrested 70 people involved in the JPEX case, although prosecution has yet to begin, official says

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Hong Kong’s financial affairs and treasury chief says the government plans to submit legislative proposals to regulate stablecoins and over-the-counter crypto trading. Photo: AFP
Xinmei Shen
The Hong Kong government is committed to regulating stablecoins and over-the-counter (OTC) crypto exchanges, according to the city’s financial affairs chief, as regulators in the Asian financial hub continue to expand their legal toolkit to supervise the broader virtual-asset industry.

The government will submit bills on licensing rules for OTC trading services and stablecoin issuers to the Legislative Council “as soon as practicable”, wrote Christopher Hui Ching-yu, secretary for the Financial Services and the Treasury Bureau (FSTB), in a reply to queries from lawmaker Carmen Kan Wai-mun on Wednesday.

Hong Kong is contending with a surge of crypto scams that have defrauded local retail investors out of hundreds of millions of dollars, as the city seeks to polish its image as a global virtual-asset hub and attract relevant businesses to set up shop.

The number of virtual-asset-related criminal cases more than doubled between 2021 and 2023, rising from just under 1,400 in 2021 to over 3,400 last year, according to Hui. The money involved jumped more than fivefold from HK$824 million in 2021 to over HK$4 billion last year.

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The cryptocurrency scandal gripping Hong Kong

The cryptocurrency scandal gripping Hong Kong
Calls for Hong Kong to regulate OTC cryptocurrency shops grew louder after last year’s implosion of JPEX, the platform at the centre of the city’s biggest-ever alleged fraud, involving thousands of victims and more than HK$1.5 billion in financial losses.
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