Shenzhen Sounds Alarm on Stablecoin Scams While Hong Kong Charges Full Speed Ahead
Stablecoins face a regulatory split in the Pearl River Delta—Shenzhen cracks down as Hong Kong doubles down.
The Stablecoin Schism
While Shenzhen authorities blast warning sirens over 'algorithmic stablecoin Ponzi schemes,' Hong Kong's Securities and Futures Commission greenlights three new USD-pegged tokens. The divergence couldn't be sharper in these neighboring financial hubs.
Wolf in Lamb's Clothing
Fraudsters are exploiting Tether's 98% market dominance to peddle fake 'Tether 2.0' schemes, according to Shenzhen regulators. Meanwhile, Hong Kong licensed issuers now hold $12B in reserves—proving even stablecoins need adult supervision.
The Great Stablecoin Divide
Mainland China's ban versus Hong Kong's embrace creates the ultimate stress test for crypto's favorite fiat proxies. Will regulation kill innovation—or just the scammers? Either way, bankers will still find a way to take their 2% cut.
A short walk
Yet, just across the border in Hong Kong, from Shenzhen—where visitors can walk between the two cities—regulators are taking a different approach.
The city is preparing to implement a new regulatory framework for stablecoins in August. Only licensed firms will be allowed to issue or market fiat-referenced tokens to users.
Financial Secretary Paul Chan reaffirmed Hong Kong’s support for the sector last month, linking stablecoin development to Asia’s, and particularly China’s, growing interest in settling trade in local currencies instead of U.S. dollars.
Stablecoins, he said, “provide a cost-effective alternative to the traditional finance system,” and could reshape cross-border payments and capital markets.
Sean Lee, co-founder of digital asset tech company IDA, told Decrypt that Hong Kong’s regulation is “very progressive in comparison to other jurisdictions."
“It leaves more openness from an international markets perspective, allowing for multi-currency issuance vs only local currency like UAE, and also the acceptance of using public networks,” he said.
“It does, however, set a fairly high bar for market entry.”
For now, Hong Kong's focus is more on business-to-business usage than on retail applications, a trend echoed in JD.com's stablecoin plans and those of other companies and banks exploring the technology.
That shift is partly due to public unfamiliarity with stablecoins, Lee added. “Also, domestic digital payment is already extremely advanced here.”
