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Stablecoin Stocks in Hong Kong Suffer from China Crackdown Comments

Cryptocurrency prices and Hong Kong stocks slumped after Beijing said it would crack down on stablecoin issuers.

376 – Daily Chart

Yunfeng Securities (HK:376) was down 10% after the news, highlighting the risk to companies involved in crypto. Despite this, the stock is still up 225% year-to-date. Clarification from China could see further losses.

Hong Kong-listed stocks related to stablecoins were lower on Monday after China’s central bank said it would scrutinize virtual currencies and flagged stablecoin concerns. Alongside, Yunfeng Financial, Bright Smart Securities and Commodities Group dropped roughly 7%.

The People’s Bank of China (PBOC) reaffirmed its plans for a tough stance on cryptocurrencies, warning of a resurgence in speculation and vowing to tackle illegal activities involving stablecoins. The PBOC specifically said that stablecoins fail to meet requirements for customer identification and anti-money-laundering.

“Virtual currencies do not have the same legal status as fiat currencies, lack legal tender status, and should not and cannot be used as currency in the market,” the bank said.

The latest news also hurt crypto across the board, with Bitcoin down 5% over the last 24 hours.

China’s central bank previously banned crypto trading and mining in 2021, noting a need to crack down on crime and risks to the financial system. In August this year, China’s financial regulators had instructed brokers to cancel seminars and halt the promotion of research on stablecoins, due to concerns that they could be exploited as a tool for fraud.

Hong Kong moved toward licensing stablecoin issuers in July, but some tech companies suspended their own plans to launch stablecoins after Chinese regulators were said to have intervened to pause any coin launches.

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.

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