The Hong Kong Securities and Futures Commission and the Monetary Authority have issued a warning: After the implementation of stablecoin regulations, the risk of fraud has increased, and investors need to remain highly vigilant.

The Hong Kong “Stablecoin Issuer Regulatory Framework” (referred to as the “Stablecoin Ordinance”) officially came into effect on August 1, and the market response has been enthusiastic. The Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) recently jointly issued a statement warning investors that related trading risks and fraudulent activities have significantly increased. Although they did not disclose specific complaint numbers since the ordinance took effect, data shows that 265 complaints related to fraud and other virtual asset-related crimes were recorded in the first half of the year, and the trend may continue to push the annual figure beyond previous years. SFC’s Executive Director of Intermediary Institutions, Yip Chi-hang, urged investors to remain rational and cautious, and to pay attention to the fluctuation risks of related concept stocks.

Joint Regulatory Statement: Beware of Rising Risks Associated with Stablecoins

The Hong Kong Securities and Futures Commission and the Monetary Authority recently issued a joint statement expressing concern over the Fluctuation in the stablecoin-related market. The statement noted that with the enactment of stablecoin regulations, market reactions have been enthusiastic; however, at the same time, the risks of fraud and transaction safety hazards have also increased. Regulatory authorities urge the public to be vigilant and carefully assess risks when engaging in any trading activities involving stablecoins.

Fraud complaints continue, and the annual figures are expected to exceed those of previous years

According to local media “Zhitong Finance”, although regulators have not specified the exact number of fraud complaints received since the stablecoin legislation came into effect, it was revealed that Hong Kong received 265 complaints related to fraud and other virtual asset-related crimes in the first half of 2025. This figure is consistent with trends over the past two years, indicating that the total number of complaints for the year is likely to exceed previous levels, highlighting the urgent need for compliance challenges and investor protection in the crypto space.

Senior Officials of the Securities Regulatory Commission Call for Rational Investment and Caution Against Fluctuation of Concept Stocks

The Executive Director of the Intermediary Institutions Division of the Hong Kong Securities and Futures Commission, Yip Chi-heng, clearly reminded investors to remain cautious and maintain a healthy level of rationality on August 18. He observed that companies expressing an intention to apply for a stablecoin issuance license usually see their stock prices rise in response. This phenomenon warns investors to be vigilant about the potential risks of market overheating speculation and the price fluctuation of concept stocks.

On the eve of the law coming into effect, cryptocurrency-related stocks experienced significant fluctuations.

In the month leading up to the implementation of the stablecoin regulations, cryptocurrency-related stocks in Hong Kong generally experienced an upward trend. For example, the stock price of the Hong Kong-listed Chinese brokerage Guotai Junan surged by 16% from late July to early August, but immediately fell back after the regulations took effect on August 1. Although Guotai Junan never explicitly announced its intention to issue a stablecoin, its identity as a financial institution involved in the crypto space attracted traders to buy in under the market’s optimistic expectations for the stablecoin regulations, which explains the rise and subsequent fall of its stock price.

The stock price of the licensed exchange OSL is also affected by fluctuations.

Similarly, Hong Kong licensed virtual asset exchange OSL also recorded significant gains. In July, the company announced that a large portion of the $300 million financing would be used to expand its stablecoin business and for global expansion, leading to a stock price increase of over 12% that month. By early August, OSL’s stock price on the Australian Securities Exchange (ASX) reached an intra-month high of $1.20, but then fell back due to market fluctuations, even dropping to $1.12 at one point. The company’s market capitalization reached a peak of approximately $14.11 million during this period.

Conclusion

The implementation of new regulations for stablecoins in Hong Kong marks an important step towards market normalization, but it also brings about the growing pains of a compliance transition period. The joint warning from the Securities and Futures Commission and the Monetary Authority highlights the vigilance of regulatory agencies against the surge in fraud risks and market manipulation behaviors accompanying the new law’s implementation. Investors, when facing investment opportunities related to stablecoins, especially the concept stocks stimulated by favorable news, should remember the reminder from Ye Zhiheng to maintain rational judgment, deeply understand the project’s fundamentals and compliance licensing status, and guard against losses caused by market overreactions or unlicensed operational risks. Regulatory agencies continue to monitor market dynamics and voice their concerns in a timely manner, reflecting Hong Kong’s proactive efforts in promoting the healthy development of the virtual asset market and protecting investor rights.