Hong Kong-listed companies with cryptocurrency connections saw sharp declines at the end of October after the People’s Bank of China signaled a crackdown on virtual currencies and raised fresh concerns about stablecoins. In a statement, the PBOC warned of a resurgence in crypto speculation and pledged to clamp down on illegal conduct tied to stablecoins. It also highlighted a key compliance problem, noting that some stablecoins failed to meet customer identification and anti-money-laundering requirements. The message left little room for uncertainty and sparked a wave of sell-offs.
Yunfeng Financial Group, which has been pushing into tokenization and other crypto-related services, plunged more than 10% in early trade. Bright Smart Securities and Commodities Group slid about 7%, while digital-asset platform OSL Group dropped over 5%. The moves reversed some of the enthusiasm that followed Hong Kong’s May stablecoin bill, which aimed to create a legal framework for fiat-pegged tokens and position the city as crypto-friendly. China’s response underscores a split-screen reality between the mainland and Hong Kong, with regulators nudging brokerages to pause certain tokenization projects and several firms reportedly shelving stablecoin launches after Beijing’s warnings.
Liu Honglin, founder of Man Kun Law Firm, said the PBOC’s statement “has erased any ambiguity, speculation, and illusions” about stablecoin policies. “Regulators have drawn a concrete red line on what used to be a vague borderline,” he added. The PBOC’s statement made one thing clear: for now, privately controlled stablecoins must meet strict standards—or face being shut down. The climate implications of the crypto sector remain complex and highly dependent on how and where these systems operate.
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