Hong Kong warns of fraud risk after new stablecoin rules

A Hong Kong SFC official warned that the new local stablecoin framework has fueled fraud risks, and urged investors to remain cautious amid hype-driven speculation.

A Hong Kong Securities and Futures Commission (SFC) official warned that the introduction of the new local stablecoin regulatory framework has increased the risk of fraud.

According to an Aug. 18 report by Chinese financial news outlet Zhitongcaijing, Ye Zhiheng, executive director of the intermediaries division at the SFC, said that fraud risks have increased with the recent introduction of stablecoin regulations. He urged investors to exercise caution and avoid making irrational investment decisions driven by market hype or price momentum.

Ye’s remarks followed stablecoin companies operating in Hong Kong posting double-digit losses on Aug. 1, just after the new stablecoin regulation came into force. Analysts at the time described the sell-off as a healthy correction, as the requirements for stablecoin issuers proved to be more stringent than expected.

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