Hong Kong will begin enforcing strict new rules on stablecoin promotions starting August 1, criminalizing the offering or marketing of unlicensed fiat-referenced stablecoins (FRS) to retail investors. Offenders could face fines of up to HK$50,000 (around $6,300) and up to six months in jail under the updated Stablecoin Ordinance.

The Hong Kong Monetary Authority (HKMA) issued a public warning urging investors to avoid any stablecoin schemes not officially licensed. HKMA Chief Executive Eddie Yue said the regulation is necessary to ensure market credibility, protect consumers, and curb speculative hype.

Yue specifically pointed to inflated stock movements tied to stablecoin announcements—such as Guotai Junan’s 300% share price surge in June following a digital asset license expansion—as evidence of market overheating. He emphasized the need to “rein in the euphoria” and noted that many license applicants fail to meet basic requirements, with vague ideas and no concrete execution plans.

Bloomberg reported around 50 firms are seeking licenses, but only a few will be approved. Yue added that while some proposals show potential, many lack the technical and financial risk management expertise to issue stablecoins responsibly.

The move aligns Hong Kong with other jurisdictions, like the EU and UK, that have banned unlicensed crypto advertising. However, Hong Kong’s approach is among the strictest—unlike the EU’s MiCA or the UK’s FCA rules, Hong Kong’s law includes criminal sentencing.

With this regulation, Hong Kong is positioning itself as a cautious but assertive global leader in crypto oversight, aiming to encourage fintech innovation while protecting the public from unregulated digital asset schemes.