The cryptocurrency OTC market in Hong Kong has significantly declined after the Stablecoin law was implemented.
The average daily volume of USDT transfers has dropped sharply, reflecting the clear impact of the new regulations effective from August 1 on local OTC trading.
MAIN CONTENT
The OTC market in Hong Kong dropped nearly 33% in the first week after the Stablecoin law.
Transferring USDT to merchant addresses decreased by over 43%, while non-merchant addresses decreased by over 30%.
Many individuals are shifting to apply for licenses or engage in underground trading to adapt.
How has the OTC market in Hong Kong reacted after the Stablecoin Law?
Data from Bitrace shows that the cryptocurrency OTC trading market in Hong Kong decreased by about 32.94% within the week after the Stablecoin Law took effect on August 1, 2024.
This reflects the significant impact of the new regulations on OTC trading activities, which is an important channel for buying and selling cryptocurrencies with flexible fees and large transactions. This volatility demonstrates increased caution and significant changes in the behavior of both investors and brokers.
Why has the volume of USDT transfers decreased more at merchant addresses?
The average volume of USDT transfers to merchant addresses decreased by up to 43.20%, significantly higher than the decrease of 30.65% at non-merchant addresses. This indicates that merchants are more heavily impacted by the new regulations.
Merchants are constrained by compliance and licensing requirements, making trading more challenging. Underground trading or seeking official licensing is viewed as two pathways to adapt to the stricter legal environment.
The impact of the Stablecoin Law is a major turning point for the OTC market, forcing parties to restructure operations to ensure compliance and maintain liquidity.
Cryptocurrency market analyst, August 2024
What are the reactions of OTC players to the new regulations?
Many participants in the OTC market in Hong Kong are currently shifting towards seeking licenses to legalize their activities, while another segment is turning to underground trading to avoid legal constraints.
This trend shows a clear polarization within the OTC trading community, with risk and flexible solutions aimed at maintaining business operations as well as liquidity. However, underground trading carries significant legal risks and lacks transparency.
What are the long-term impacts on the OTC and cryptocurrency markets in Hong Kong?
Strict regulations may make the OTC market in Hong Kong more transparent and stable in the long run, but they will also limit flexibility and the appeal of this channel in the initial period.
The shift of many individuals towards seeking licenses contributes to strengthening the legal environment and creating a sustainable development foundation for the cryptocurrency market. Although there is currently a decline in volume, this is a necessary standardization step for long-term growth.
Frequently Asked Questions
How does the Stablecoin Law affect OTC trading in Hong Kong?
The law has led to a sharp decline in OTC trading volumes due to increased compliance and licensing requirements, causing many parties to be cautious or switch to other forms.
What percentage has the volume of USDT transfers to merchants decreased?
The average volume decreased by up to 43.20%, indicating that merchants are under significant pressure from the new regulations.
How do OTC participants react to the new regulations?
Many people choose to seek legal licensing or switch to underground trading to adapt to the regulatory environment.
Will the OTC market in Hong Kong recover after this decline?
There may be a long-term recovery as parties complete compliance processes and the market stabilizes.
Will the new regulations help make the cryptocurrency market more transparent?
Yes, enhanced legal measures will create a more transparent and sustainable foundation for the cryptocurrency market.
Source: https://tintucbitcoin.com/stablecoin-hk-giam-33-otc-sau-quy-dinh/
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