Chinese internet giants and state-owned enterprises operating in Hong Kong may soon face restrictions on their involvement with stablecoins and cryptocurrency activities. According to local reports, these mainland Chinese firms might be compelled to withdraw from crypto-related endeavors, with many expected to abstain from pursuing stablecoin licenses under Hong Kong's new regulatory framework which began on August 1. Several banks, including HSBC and the Industrial and Commercial Bank of China, are reportedly withdrawing from this licensing competition. The Hong Kong Monetary Authority is also contemplating easing capital requirements for banks managing crypto assets to better facilitate stablecoin adoption. Although major Chinese institutions had previously shown interest in Hong Kong's stablecoin opportunities, the recent regulatory environment has led to a more cautious approach. Authorities have expressed concerns that stablecoins could be used for fraudulent activities, thereby reinforcing China's historically restrictive stance towards them. Despite these restrictions, there are hints of openness towards studying stablecoins, as evidenced by a recent meeting aimed at exploring their global use in connection to China's currency.

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