Hong Kong Warns of Rising Fraud Risks After Stablecoin Law Adoption

The Hong Kong Securities and Futures Commission (SFC) has issued a warning to investors: following the introduction of the new stablecoin ordinance, which took effect on August 1, market enthusiasm has surged, but so have the risks of fraud and speculative activity.

📉 Growing Fraud Cases

According to official data, 265 complaints related to fraud and other digital asset crimes were filed in just the first half of this year. This figure is consistent with the past two years, suggesting that 2025 could mark a record high in reported fraud cases. Together with the Hong Kong Monetary Authority, the SFC released a joint statement highlighting concerns over increased market volatility tied to stablecoins and urging the public to exercise caution.

📈 Crypto Stocks on the Rise

The current wave of interest has quickly impacted stock markets. For example, Chinese brokerage Guotai Junan, listed on the Hong Kong Stock Exchange, saw its shares climb by 16% from late July before retreating in early August. This happened despite the company never explicitly confirming any intention to issue stablecoins—its mere association with the crypto sector was enough to attract investors. OSL, Hong Kong’s first licensed crypto exchange, also posted strong gains. Its stock rose by more than 12% in July after announcing that a portion of the newly raised $300 million would be allocated to stablecoin projects and global expansion. By early August, OSL’s stock price peaked at $1.20 on the ASX before dropping back to $1.12 amid volatility.

📊 Investor Caution

On August 18, Ye Zhiheng, Executive Director of the SFC’s Intermediaries Division, urged investors to remain rational: “Shares of companies hinting at involvement with stablecoins often see sharp price movements. It’s crucial to keep a cool head and avoid rash decisions.” Hong Kong is positioning itself as one of the most active hubs in crypto regulation, but the challenge remains to maintain market stability while protecting investors from fraud.

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