Hong Kong Monetary Authority Warns Against Fake Stablecoin Promotions, Reaffirms Licensing Requirements

On August 8, the Hong Kong Monetary Authority (HKMA) issued a public statement cautioning citizens about recent incidents involving fraudulent stablecoin promotional materials that falsely use the HKMA logo. The regulator reiterated that under the Stablecoin Ordinance, which came into effect on August 1, the sale of stablecoins must be conducted exclusively through licensed providers. These include authorized entities such as licensed stablecoin issuers, Securities and Futures Commission (SFC)-licensed Type 1 regulated activity corporations, virtual asset trading platforms, banks, and stored-value facility licensees.

The HKMA emphasized that over-the-counter (OTC) virtual asset trading institutions are not recognized as authorized providers under the new ordinance. It also warned the public about the risks associated with purchasing unregulated stablecoins through non-regulated channels, stressing that individuals bear the responsibility for any potential losses incurred.

This announcement underscores the HKMA's commitment to safeguarding the public from fraudulent activities in the rapidly evolving virtual asset space. The regulator has been actively establishing frameworks to ensure transparency and security in the stablecoin market, which is critical for maintaining trust in Hong Kong's financial ecosystem.

The Stablecoin Ordinance represents a significant step in Hong Kong's approach to regulating virtual assets. By requiring stablecoin issuers and sellers to obtain proper licensing, the ordinance aims to mitigate risks such as fraud, money laundering, and financial instability. The move aligns with Hong Kong's broader strategy to position itself as a global hub for digital finance while maintaining stringent regulatory oversight.

The HKMA's warning serves as a reminder for investors to verify the legitimacy of stablecoin providers and promotional activities. As the virtual asset market continues to grow, regulators worldwide are grappling with the challenge of balancing innovation with consumer protection. Hong Kong's proactive measures could set a precedent for other jurisdictions looking to regulate stablecoins effectively.

Industry experts believe that the enforcement of the Stablecoin Ordinance will enhance market credibility and attract institutional investors to Hong Kong's digital asset sector. However, the effectiveness of these measures will depend on the HKMA's ability to monitor compliance and penalize violations rigorously.