Hong Kong's "Stable Coin Ordinance" Takes Effect on August 1! Concept Stocks of Hong Kong-listed Stable Coins Drop Sharply, with YCT Financial Down 17%, Yunfeng Financial Down 15%, etc.

Concept stocks of Hong Kong-listed stable coins plummeted further in the afternoon, with YCT Financial down over 17%, Yunfeng Financial down over 15%, and Gold Rush Investment, Huayuan Healthcare, Linked Digital, OSL Group, and CITIC International Securities all down over 9%. CITIC International (601211) dropped over 8%.

The Hong Kong "Stable Coin Ordinance" took effect on August 1, introducing a licensing system for the establishment of law-based stable coin issuers in Hong Kong and enhancing the regulatory framework for virtual asset activities in Hong Kong to maintain financial stability while promoting financial innovation. After the implementation of the "Stable Coin Ordinance", anyone who issues law-based stable coins in or outside of Hong Kong must apply for a license from the Financial Management Authority. Relevant persons must meet requirements for reserve asset management, redemption, and other aspects, including properly separating customer assets, maintaining sound stable mechanisms, and meeting reasonable conditions for redeeming holders' claims. Relevant persons also need to comply with a series of anti-money laundering and terrorist financing regulations, risk management, disclosure rules, and audit and staff selection requirements. The Financial Management Authority will consult further on detailed regulatory requirements from time to time.