China's financial regulators have imposed new restrictions on stablecoin research, citing concerns about fraud. Meanwhile, digital asset market activity continues to grow, particularly in Hong Kong.
Bans on Stablecoin Research
Chinese financial regulators have ordered brokerages and think tanks to cancel seminars and cease publishing research on stablecoins. This decision comes amid fears that stablecoins could become a new vehicle for fraud.
Growth of OTC Trading Amid Bans
Despite the prohibitions, OTC trading of digital assets reached $75 billion in the first nine months of 2024, according to Chainalysis, indicating that crypto activity continues through informal channels.
Hong Kong as a Digital Asset Hub
In contrast to mainland restrictions, Chinese regulators are supporting the development of Hong Kong as a regional hub for digital assets. Reports indicate the city has licensed 11 cryptocurrency exchanges and 44 companies authorized to trade digital assets.
Thus, China's approach to cryptocurrencies remains cautious, balancing stringent risk management on the mainland with fostering innovation and control through Hong Kong's financial ecosystem.
