Hong Kong will impose strict penalties, including fines and jail time, for promoting unlicensed stablecoins to retail investors under its new Stablecoin Ordinance, which will take effect on August 1.
Offenders face up to six months in prison and fines of HK$50,000 ($6,300).
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The Hong Kong Monetary Authority (HKMA) issued a public warning on Wednesday advising investors to avoid unlicensed offerings to prevent legal risks.
HKMA Chief Executive Eddie Yue said the law aims to stabilize the emerging stablecoin market and protect investors from fraud and rampant speculation.
Yue pointed out that market frenzy, driven by enthusiasm generated by announcements about stablecoins, had pushed stock prices and trading volumes to unjustified levels. "It seems necessary to further rein in the euphoria," Yue said in Wednesday's statement.
The following day, Bloomberg reported that up to 50 companies had applied for stablecoin licenses.