As Hong Kong moves forward with cryptocurrency trading adoption for individual investors, a local official stressed that retail stablecoin trading is not yet permitted.

Hong Kong’s Secretary for Financial Services and the Treasury Sam Hui said that Hong Kong has yet to adopt regulations for stablecoins such as Tether (USDT) or USD Coin (USDC), meaning retail investors are not allowed to trade these assets.

According to local news agency Ming Pao, the official made the comments regarding cryptocurrency regulation in Hong Kong during an online investment committee meeting on Oct. 6.

Hui said that stablecoins such as USDT have been widely used by cryptocurrency service providers as the main trading assets because their value is designed to be stable by being pegged to assets such as the U.S. dollar or gold. However, the secretary pointed out that some stablecoins have faced serious volatility issues and even collapsed in the past, adding that the reserve management of stablecoins greatly affects the price stability of investors' rights to redeem fiat currencies.

Given these risks, retail trading of stablecoins will not be allowed until Hong Kong formally regulates them, Hui reportedly declared.

Hui also mentioned that the shuttered local cryptocurrency exchange JPEX — which allegedly promoted its services in the region without a license — was involved in a serious fraud case, reflecting the need for greater regulation of the cryptocurrency market.

Cointelegraph has contacted the Hong Kong Securities and Futures Commission to inquire about the country’s stablecoin trading rules. This article will be updated until new information is provided by the regulator.

Related: Hong Kong police recover $11 million worth of assets in JPEX case: report

JPEX stopped certain services on its platform in mid-September 2023, citing “unfair treatment” by certain institutions in Hong Kong that triggered a liquidity crisis. JPEX quickly became the center of a major scandal in the industry, with Hong Kong authorities launching an investigation after receiving more than 2,000 complaints from JPEX users, reporting losses of nearly $180 million.

The JPEX case comes weeks after Hong Kong regulators officially allowed retail investors to trade cryptocurrencies such as Bitcoin (BTC) in early August 2023. The Hong Kong Monetary Authority is expected to introduce regulatory guidelines for the stablecoin market by the end of 2024.

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