Hong Kong rolls out investor protection blueprint as stablecoin scams surge

The introduction of Hong Kong’s Stablecoin Ordinance on August 1 has triggered both enthusiasm and alarm, as regulators warn of a sharp rise in stablecoin scams cases.

According to the Securities and Futures Commission (SFC), while investor interest in regulated stablecoin products has surged, the parallel spike in scams and trading risks underscores the urgent need for heightened vigilance in the market.

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority have issued a joint statement addressing the risks associated with stablecoins. The regulators voiced concern over heightened market volatility and warned the public of possible fraudulent activities involving stablecoins in Hong Kong. Investors were urged to exercise prudence when engaging in digital asset investments.

While the agencies did not disclose the exact number of Hong Kong stablecoin scam complaints received since the ordinance was enacted, they revealed that 265 complaints related to fraud and other digital asset crimes were filed in the first half of the year. This figure has remained steady over the past two years suggesting that 2025 could see Hong Kong stablecoin fraud complaints surpass previous annual records.

On August 18, Ye Zhiheng, Executive Director of the SFC’s Intermediaries Department reiterated the need for investor’s caution. He noted that stocks of companies expressing interest in stablecoin issuer licenses often experience price surges which can attract opportunistic Hong Kong stablecoin scam attempts.

Market Impact

The anticipation of the Stablecoin Ordinance has fueled a rally in crypto related stocks further intensifying Hong Kong stablecoin fraud risks.

For example, shares of Hong Kong listed Chinese brokerage Guotai Junan jumped 16% from late July to early August, despite the company never officially declaring an interest in stablecoin issuance. This surge in trading activity has created fertile ground for Hong Kong stablecoin scam schemes targeting unwary investors.

Similarly, OSL, Hong Kong’s first licensed crypto exchange, saw its stock price rise over 12% in July after announcing plans to allocate a significant portion of its $300 million fundraising to stablecoin initiatives and global expansion. After hitting $1.20 on the ASX, the stock slipped to $1.12 amid volatility tied to Hong Kong stablecoin fraud, OSL’s market cap also climbed to $14.11 million during this period.

As the Hong Kong stablecoin market continues to evolve, authorities remain vigilant against Hong Kong stablecoin scams. Investors are strongly advised to stay informed, exercise caution and be alert to potential scams as the regulatory landscape shifts and market activity intensifies.