USDT and USDC Worry-Free in Hong Kong? Lawyer Wu Wenqian Clarifies the "Four Major Misunderstandings" of the Hong Kong Stablecoin Bill

Hong Kong (Stablecoin Ordinance) came into effect on August 1st, and its strict regulatory requirements have recently sparked heated discussions and questions in the market. Wu Wenqian, a senior compliance lawyer, gave an exclusive interview to (Wu Shuo Blockchain), providing an in-depth analysis of the details of the bill and clarifying misunderstandings about the circulation of USDT, USDC, and KYC requirements. (Previous report: Hong Kong (Stablecoin Ordinance) starts, USDT and USDC are illegal?) (Background Supplement: Hong Kong Stablecoin Bill Released: Holders Need KYC, DeFi and Privacy Protocols Prohibited) The Hong Kong (Stablecoin Ordinance) officially came into effect on August 1st, but its strict regulatory requirements, such as the requirement for coin holders to undergo identity verification (KYC), have sparked widespread discussions and questions in the market. Many people worry that the ordinance may restrict the circulation of mainstream stablecoins such as USDT and USDC in Hong Kong, and even affect the development of over-the-counter (OTC) markets and decentralized finance (DeFi) ecosystems. Against this background, (Wu Shuo Blockchain) recently invited Wu Wenqian, a senior compliance lawyer in Hong Kong, to conduct an in-depth analysis of the details of the newly effective stablecoin bill and clarify many misunderstandings in the market. The following article will bring detailed information to readers. Wu Wenqian: The Stablecoin Ordinance is Limited to Stablecoins Issued in Hong Kong or Pegged to Hong Kong Dollars Wu Wenqian pointed out that one of the biggest misunderstandings in the market about the (Stablecoin Ordinance) is that overseas stablecoins such as USDT and USDC will be prohibited from use in Hong Kong. He emphasized that the ordinance only regulates stablecoins issued in Hong Kong or pegged to the Hong Kong dollar to maintain a stable value. USDT and USDC are not issued in Hong Kong and are not priced in Hong Kong dollars, so they are not within the scope of regulation and do not need to apply for a Hong Kong license. This means that the legal status of these mainstream stablecoins in Hong Kong is not affected, and the market does not need to worry too much about restrictions on their circulation. OTC Trading is Not Restricted, but Retail Participation Remains Uncertain Regarding rumors that USDT and USDC trading is prohibited in Hong Kong, Wu Wenqian further clarified that the ordinance regulates the "issuance" of stablecoins (i.e., the first on-chain or "minting"), not the buying and selling behavior. Therefore, USDT and USDC trading in the Hong Kong OTC market is not bound by the new law. For example, the licensed virtual asset trading platform HashKey currently still supports USDT trading. However, Wu Wenqian reminded that OTC trading may face specialized regulation in the future, but it has not yet been determined whether it will be handled by the Customs or the Securities and Futures Commission (SFC). Especially regarding whether retail investors can trade USDT and USDC, regulators are currently conservative. If retail participation is prohibited, it may weaken Hong Kong's position as an international cryptocurrency financial center. KYC Requirements are Not Mandatory, Regulators Prefer Closed-Loop Models Regarding the controversy that coin holders must complete KYC, Wu Wenqian said that the ordinance does not explicitly require all coin holders to undergo identity verification, but the Hong Kong Monetary Authority (HKMA) tends to recognize closed-loop, controllable business models in license approvals. For example, if JD.com issues stablecoins and requires users to verify their identity on the platform, this model is more likely to be approved. DeFi models involving anonymous transactions are difficult to pass approval. He emphasized that regulators will judge the applicant's anti-money laundering capabilities based on their business model and indirectly increase KYC requirements, showing Hong Kong's strict control over compliance. The HKMA's Authority is Limited, and the Issuance Determination Requires Multiple Considerations Wu Wenqian also refuted the claim that the HKMA can arbitrarily determine the issuance of stablecoins, pointing out that its authority must follow legal procedures, including announcements and objection periods, to ensure that regulation does not overstep its authority. In addition, whether it constitutes "issuance in Hong Kong" will also depend on a number of factors, such as whether the management team is in Hong Kong, the place of company registration, and whether the reserve assets are denominated in Hong Kong dollars and stored in Hong Kong banks. These standards will provide clear guidance for the compliance of stablecoin projects to avoid excessive speculation in the market about the scope of regulation. Conclusion: Hong Kong's Stablecoin Regulation is Advancing Steadily, and the Market Needs to Take a Rational View Wu Wenqian's interpretation provides the market with a relatively authoritative legal perspective. He finally reminded that decentralized and compliant stablecoins are two parallel paths. Hong Kong's market size is limited, and imagination must be transformed into concrete investment and application in order to maintain a position in international cryptocurrency competition. Clear and continuous regulatory logic gives Hong Kong the opportunity to play an important "compliance hub" in the global stablecoin competition. Facing future challenges, continuing to clarify misunderstandings and steadily advancing the licensing system will be the key for Hong Kong to maintain its reputation and attractiveness in an increasingly changing market. Related Reports Bloomberg View: Hong Kong Taxi Demonstrates Perfect Example of "Stablecoin Daily Life" Straightforward Hong Kong Stablecoin Policy Implementation, All You Need to Know Hong Kong (Stablecoin Ordinance) Full Interpretation: From Definition, Regulatory Framework, Application Qualifications to Market Impact"USDT and USDC Worry-Free in Hong Kong? Lawyer Wu Wenqian Clarifies the "Four Major Misunderstandings" of the Hong Kong Stablecoin Bill" This article was first published on BlockTempo (BlockTempo - the most influential blockchain news media).