On August 1, 2025, Hong Kong’s newly implemented stablecoin regulations created immediate disruptions across the local over-the-counter crypto market. Several OTC shops, including One Satoshi, made the decision to temporarily shut down operations due to concerns about regulatory compliance and legal uncertainties surrounding the new framework.
Hong Kong’s stablecoin regime takes effect today — a new chapter in crypto regulation begins. On this episode of OSL Talk, we sit down with Angela Wong, ex-SFC and now MD at QReg, to unpack what’s really happening behind the scenes. 👀
From “stablecoins can’t even buy coffee” to… pic.twitter.com/kxLS73s624
— OSL (@osldotcom) August 1, 2025
The regulations establish a comprehensive licensing requirement for all stablecoin-related activities within Hong Kong’s jurisdiction. This regulatory shift aims to create strict oversight of fiat-referenced stablecoin operations through a robust licensing model, fundamentally changing how OTC shops can conduct business in the territory.
Mixed Industry Response Creates Market Uncertainty
The crypto community’s reaction to these regulations has been notably divided. While some operators chose to cease operations entirely to avoid potential legal complications, others have continued their services by interpreting certain aspects of the ordinance as creating regulatory gray areas, particularly regarding overseas-issued stablecoins.
Song Min, President of the Hong Kong International Finance Society, provided insight into the regulatory philosophy behind these changes. “Technology cannot replace regulation,” Min stated, underscoring the government’s position that proper oversight remains essential regardless of technological innovation. Min further emphasized that “the development of stablecoins in Hong Kong should be anchored in the ‘main battlefield’ of the real economy, such as cross-border trade.”
Broader Market Context and Global Trends
Hong Kong’s approach to stablecoin regulation aligns with similar legislative movements worldwide, including the European Union’s Markets in Crypto-Assets (MiCA) framework, which has also impacted OTC liquidity in those jurisdictions. This coordinated global approach suggests a broader shift toward standardized crypto regulation across major financial centers.
Current market data shows Tether USDt (USDT) maintaining its stable $1.00 value with a market share of 4.45%, according to CoinMarketCap. However, trading volume experienced a 24.46% decline over the past 24 hours, potentially reflecting market uncertainty stemming from these regulatory developments.
Industry experts anticipate that Hong Kong’s crypto market may experience significant regulatory and financial adjustments as businesses adapt to the new compliance requirements. The ongoing demand for clearer regulatory guidelines is expected to shape future stablecoin operations, as market participants seek to balance continued innovation with enhanced security measures.
Potential Market Implications
The regulatory uncertainty in Hong Kong’s OTC market may contribute to short-term volatility as businesses adjust their operations to comply with new licensing requirements. Market participants will likely monitor how effectively the new framework balances regulatory oversight with maintaining Hong Kong’s position as a crypto-friendly jurisdiction.
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