Hong Kong’s once-thriving crypto industry is experiencing a significant slowdown as Chinese regulators tighten restrictions and urge businesses to reduce their exposure to offshore crypto assets. After a period marked by intense interest from Chinese mainland internet giants, state-owned banks, and brokerages seeking stablecoin licenses and launching various projects in Hong Kong, Beijing has issued directives advising these firms to scale back their involvement. The message from Chinese regulators is clear: limit dealings with cryptocurrencies like Bitcoin, Ether, and Tether, avoid speculative activities, and do not use Hong Kong as a loophole to circumvent mainland rules.[para. 1][para. 2][para. 3]
This shift aligns with a broader global trend. Since early 2025, the U.S. has advanced new digital asset legislation, prompting global regulatory scrutiny. Hong Kong quickly constructed its own crypto rules and attracted numerous mainland applicants. However, by late summer, enthusiasm for stablecoins and related crypto ventures had diminished, coinciding with Beijing quietly instructing mainland firms to pull back. Internet platforms were explicitly told to steer clear of major cryptocurrencies and not to seek offshore crypto licenses. State-owned banks, including major players like Bank of China (Hong Kong), have been told to delay stablecoin license pursuits, while brokerages are ordered to halt tokenizing mainland assets for overseas fundraising, with regulators especially wary of potential tax evasion and money laundering via cross-border crypto trading.[para. 4][para. 5][para. 6][para. 7][para. 8]
The core regulatory concern lies in the potential systemic risk posed by linking China’s financial institutions to dollar-backed stablecoins and unregulated cryptocurrencies, which could cause unpredictable dependencies and financial vulnerabilities.[para. 9][para. 10] The segment of tokenized real-world asset (RWA) issuances—offshore fundraising using mainland assets—had surged in recent months, with firms like Ant Group at the forefront. However, the business model has always operated in a legal gray zone, raising compliance issues regarding data transfer and transparency. Since late summer, several Chinese brokerages licensed in Hong Kong have been ordered to discontinue these services. As a result, only projects with entirely offshore assets continue, while onshore asset transactions going offshore are blocked.[para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17][para. 18]
Additionally, the recent phenomenon of corporate “crypto hoards,” with Hong Kong-listed companies such as Boyaa Interactive and IVD Medical announcing large holdings in Bitcoin and Ether, is also waning under regulatory caution. Regulators now consider such strategies risky financial leverage. Perceived vulnerabilities include reliance on crypto-driven hype and the potential for dramatic stock price collapses if inflows cease. Even high-profile firms like Yunfeng Financial and Ant Group have distanced themselves from speculation, with Ant Group’s CEO promising a policy of not issuing or speculating in crypto assets.[para. 19][para. 20][para. 21][para. 22][para. 23][para. 24]
Internet brokerages, previously targeted by regulators for enabling mainland investors to trade offshore, are under renewed scrutiny, resulting in blocked access and frozen accounts for mainland users. Hong Kong now requires Virtual Asset Trading Platforms (VATPs) to be licensed, but compliance among brokers partnering with VATPs varies. Recent enforcement measures have begun to suppress rapid sector growth.[para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33]
Finally, the rollout of Hong Kong’s stablecoin licensing regime in August 2025 saw a rush of 77 expressions of interest. Yet, Chinese institutional enthusiasm is fading. Many major banks and enterprises are pausing or reconsidering applications amid regulatory caution, with only a few proceeding. Analysts now predict more sober prospects for stablecoin ventures, with some bankers suggesting digital yuan adoption as a safer alternative, supported by Beijing’s push for cross-border digital yuan settlements.[para. 34][para. 35][para. 36][para. 37][para. 38][para. 39][para. 40]
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