Recently, there have been two major events in the stablecoin community, and regulatory measures are even stricter than expected.

First, let’s talk about mainland China. The central bank, together with 13 other departments, issued a tough statement—stablecoins are directly classified as virtual currencies, and related activities are considered illegal financial activities. This isn’t just a routine risk warning; it’s more like a preemptive move to clear the way for the digital RMB. Gray areas? Pretty much gone.

Now, let’s look at Hong Kong. New regulations have already come into effect, and retail investors have no chance of touching USDT. Since the issuer, Tether, hasn’t obtained a license, only professional investors with assets over HKD 8 million can trade it. Those street money changers and OTC counters? You can basically say goodbye to them.

These two moves have had a significant impact:

First, capital flows will change. The gray channels in the mainland are now blocked, so money will either exit the market and wait on the sidelines, or find other ways to move in and out. Liquidity will definitely take a hit.

Second, compliant stablecoins now have an opportunity. Coins like USDC, which are more transparent and have regulatory backing, may benefit from Hong Kong’s licensing system. The redistribution of market share has already begun.

Third, Hong Kong has a very calculated plan. By setting a very high threshold to keep out retail investors and bringing in institutions and large funds, they’re trying to create a high-end financial experimental zone serving cross-border trade and the real economy. The ambition is clear, but whether it succeeds depends on supporting policies down the line.

When the world’s largest stablecoin is simultaneously restricted in two core markets, an industry shakeup is inevitable. Some see this as a sign of an even harsher crypto winter, while others believe it’s the start of a new compliance cycle. Whether Hong Kong’s “sandbox” can attract mainstream capital remains to be seen.

What do you think about these moves? Share your thoughts in the comments.