Key Highlights
- Hong Kong-listed cryptocurrency and stablecoin stocks dropped sharply after the PBOC issued a crackdown warning.
- Yunfeng Financial, Bright Smart, and OSL Group saw declines of 10%, 7%, and 5%, respectively.
- Chinese tech firms, including Ant Group and JD.com, paused stablecoin plans amid regulatory scrutiny.
Hong Kong-listed companies with businesses related to cryptocurrency and stablecoins saw their stock prices fall sharply on Monday following a warning from China’s central bank.
The People’s Bank of China (PBOC) said on Saturday that it would crack down on illegal activities involving virtual currencies and stablecoins, citing a resurgence in crypto speculation. The central bank also highlighted that stablecoins did not meet requirements for customer identification and anti-money-laundering controls.
Liu Honglin, Founder of Man Kun Law Firm, commented on the announcement, saying: “Regulators have drawn a concrete red line on what used to be a vague borderline.” He added that the statement “has erased any ambiguity, speculation and illusions” about China’s stablecoin policies.
Stock movements
Following the PBOC statement, shares of cryptocurrency-related companies in Hong Kong fell:
- Yunfeng Financial Group (0376), which has been expanding into cryptocurrency and tokenization, dropped more than 10%, its largest decline in two months.
- Bright Smart Securities and Commodities Group (1428) fell roughly 7%.
- OSL Group (0863), a digital-asset platform, lost over 5%. The decline in share prices followed the PBOC’s warning about cryptocurrency and stablecoin activities.
Investors showed concern over potential new restrictions on businesses operating in this sector in Hong Kong.
Hong Kong’s stablecoin law
In May, Hong Kong passed a bill regulating fiat-backed stablecoins. The law sets out rules for businesses and investors and aims to establish the city as a centre for digital assets.
After the legislation was introduced, interest in virtual currencies grew in Hong Kong and also attracted attention from investors in mainland China, where cryptocurrency trading has been banned since 2021.
Impact on Chinese companies
After the PBOC statement, Chinese tech companies such as Alibaba-backed Ant Group and e-commerce firm JD.com paused plans to issue stablecoins in Hong Kong. In September, sources told Reuters that China’s securities watchdog had advised some local brokerages to halt their real-world asset tokenisation operations in the city temporarily.
The PBOC issued the warning following a meeting attended by 13 government agencies. The statement outlined the regulatory requirements for stablecoins and highlighted the government’s continued oversight of cryptocurrency activities in Hong Kong.
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