The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) today issued (Aug 14) the following joint statement on recent market movements in relation to stablecoins.
The HKMA and the SFC have noted recent abrupt market movements linked to the stablecoin concept. These movements appear to follow corporate announcements, news reports, social media posts or speculations regarding plans to apply for stablecoin issuer licence, engage in related activities or explore the feasibility of such initiatives in Hong Kong. Some of these claims have also mentioned recent engagements with financial regulatory authorities in Hong Kong.
The HKMA reiterates that it adopts a robust and prudent approach, with a reasonably high bar, in considering applications for stablecoin issuer licence. The HKMA emphasises that an indication of interest or application for a stablecoin licence, and the HKMA's communication with the interested entities are just part of the licensing process. The granting of licence will be determined by the fulfilment of the licensing criteria.
Given the significant uncertainties surrounding the outcomes of these preliminary plans or applications, the abrupt market movements noted above, often driven by excitement or speculation, highlight the need to stay vigilant in these frenetic situations. This heightened volatility in share prices can lead to irrational decisions, thereby exposing investors to undue risks.
In the light of this phenomenon, the HKMA and the SFC urge the public to exercise caution, conduct thorough research, and refrain from making irrational investment decisions based solely on market hype or price momentum. They should remember well-considered and informed decision-making is essential to mitigate risks in times of heightened volatility.
Market participants are reminded to exercise responsibility in public communications, and refrain from making statements that could mislead investors or create unrealistic expectations.
To safeguard market integrity and protect investors, the SFC's dedicated market surveillance team, equipped with advanced and proven systems, will closely monitor trading activities in Hong Kong. It will take stringent actions against any manipulative or deceptive practices that could compromise the integrity of the market.
The Chief Executive of the HKMA, Mr Eddie Yue, said, "The HKMA adopts a rigorous and prudent approach in assessing applications for stablecoin issuer licence. The approval thresholds set are high, and only a handful of licences will be granted initially. We have been in preliminary communication with dozens of parties regarding stablecoin licensing as part of our market engagement. Such communication, or the related indication of interest or application, is not an indicator of approval or endorsement of any entity's prospects."
The Chief Executive Officer of the SFC, Ms Julia Leung, said, "Recent share price movements associated with the stablecoin concept underscore the importance for investors to be clear-minded about the risks involved and the potential financial losses from making relevant investments. In addition to conducting thorough research themselves, they should always be mindful of the misleading prospects of gains from short-term price volatility and be wary of unsubstantiated claims, particularly those appearing on social media. The SFC will continue to monitor market activities closely and will not hesitate in taking forceful and decisive actions to maintain market integrity and protect investors from undue risks."
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