Stablecoin companies in Hong Kong experienced significant stock declines amid local regulatory changes and a general market downturn, with losses reported at double digits for firms like Bright Smart Securities (over 16%), Guotai Junan International Holdings (11%), and others. Local experts regard this correction as a healthy adjustment to speculative enthusiasm. Allen Huang from the Hong Kong University of Science and Technology described it as a necessary market recalibration to prioritize stability and credibility, especially following the introduction of strict regulations which include one-to-one reserves and minimum capitalization requirements. Other analysts echoed this sentiment, indicating that the correction will help filter out short-term speculation and consolidate capital among stablecoin issuers. While regulatory changes may lead to some players pausing or switching jurisdictions, it’s anticipated that well-capitalized firms will adapt to comply with these new standards. The regulatory transition period is expected to shape the market, favoring established firms while posing challenges for smaller entrants. Despite the current downturn, experts still see potential for Hong Kong's stablecoins to carve out a niche in international settlements and DeFi by leveraging strict regulations and its financial hub status.

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