Hong Kong Criminalizes Unlicensed Stablecoin Promotions to Retail Investors Imposes Fines Up to HK$50000 and 6-Month Jails from August 1

Hong Kong will enforce a new regulatory framework starting August 1, criminalizing the promotion of unlicensed stablecoins to retail investors. Under the Stablecoin Ordinance, individuals or entities offering or advertising unlicensed fiat-referenced stablecoins (FRS) could face fines of up to HK$50,000 and imprisonment of up to six months [1][2]. The regulation aims to curb speculative trading and ensure compliance with existing financial oversight measures, reflecting Hong Kong’s broader strategy to align its digital asset framework with global regulatory standards [3].

The ordinance specifically targets activities involving unlicensed stablecoins, which are tokens pegged to fiat currencies like the U.S. dollar. Retail investors—defined as non-professional individuals—are now shielded from exposure to unregulated stablecoin products, a move designed to mitigate risks associated with market instability and fraud [1][4]. The Hong Kong Monetary Authority (HKMA), the region’s central bank, issued a public warning urging investors to avoid unlicensed offerings to prevent inadvertently violating the law. HKMA Chief Executive Eddie Yue emphasized that the regulation seeks to bring credibility to the stablecoin sector while protecting investors from speculative frenzies and fraudulent schemes [1].

Yue highlighted concerns about the current market environment, noting that hype-driven announcements have led to unjustified spikes in stock prices and trading volumes. He criticized many institutional proposals for stablecoin licenses as vague, lacking concrete implementation plans or risk management strategies. While some applicants demonstrated viable use cases, they often lacked technical expertise to issue stablecoins or manage financial risks effectively. As a result, HKMA anticipates granting licenses to only a small number of applicants in the initial phase, with most applications expected to be rejected [1].

Hong Kong’s approach is among the strictest globally, combining criminal penalties with financial oversight to balance innovation and investor protection. By August 1, entities must comply with the new framework, which includes capital adequacy and anti-money laundering requirements for licensed providers. The regulation aligns with broader global trends, such as the European Union’s Markets in Crypto-Assets Regulation (MiCA), which imposes substantial financial fines but no imprisonment for violations. In contrast, the United Kingdom’s Financial Conduct Authority has struggled to enforce similar rules, with only half of illegal crypto ads removed as of January [1].

Analysts suggest the regulation could temper speculative trading in the stablecoin market, which has grown alongside cryptocurrencies like Bitcoin [5]. The timing of the enforcement underscores urgency for market participants to adjust operations, particularly as 50 companies reportedly apply for stablecoin licenses. However, the regulation does not explicitly address cross-border activities, raising questions about its scope against global platforms. The focus on domestic retail promotions indicates a targeted strategy to address local risks rather than a broad ban on stablecoins [1].

Sources:

[1] [title1] [https://cointelegraph.com/news/hong-kong-stablecoin-law-august-2025]

[2] [title2] [https://www.tradingview.com/news/cointelegraph:0c97addd1094b:0-hong-kong-to-criminalize-unlicensed-stablecoin-promotions-from-aug-1/]

[3] [title3] [https://www.ainvest.com/news/hong-kong-criminalizes-unlicensed-stablecoin-promotions-ordinance-effective-august-1-regulate-digital-assets-curb-speculation-2507/]

[4] [title4] [https://www.cryptonsole.com/hong-kong-to-criminalize-unlicensed-stablecoin-promotions-starting-august-1/]

[5] [title5] [https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96489889/hong-ong-to-criminalize-unlicensed-stablecoin-pro]