Hong Kong-listed companies with cryptocurrency connections saw sharp declines at the end of October after the People's Bank of China signaled a crackdown on virtual currencies and raised fresh concerns about stablecoins, reported Reuters. The regulator's unusually direct warning, aimed at curbing speculation and illegal activity, rattled investors who had been betting on Hong Kong's efforts to become a regional hub for digital assets.
In a statement, the PBOC warned of a "resurgence in crypto speculation" and pledged to clamp down on illegal conduct tied to stablecoins. It also highlighted a key compliance problem, noting that some stablecoins failed to meet customer identification and anti-money-laundering requirements. The message left little room for uncertainty and sparked a wave of sell-offs.
Yunfeng Financial Group, which has been pushing into tokenization and other crypto-related services, plunged more than 10% in early trade. Bright Smart Securities and Commodities Group slid about 7%, while digital-asset platform OSL Group dropped over 5%. The moves reversed some of the enthusiasm that followed Hong Kong's May stablecoin bill, which aimed to create a legal framework for fiat-pegged tokens and position the city as crypto-friendly.
China's response underscores a split-screen reality between the mainland and Hong Kong. Liu Honglin, founder of Man Kun Law Firm, said the PBOC's statement "has erased any ambiguity, speculation, and illusions" about stablecoin policies. "Regulators have drawn a concrete red line on what used to be a vague borderline," he added, per Reuters.
Regulatory pressure is already reshaping corporate plans: Mainland regulators have nudged brokerages to pause certain tokenization projects in Hong Kong, and major firms reportedly shelved stablecoin launches after Beijing's warnings. The PBOC's statement made one thing clear: For now, privately controlled stablecoins must meet strict standards — or face being shut down.
The crypto industry's growth has also raised questions about environmental impact. Some digital-asset operations, particularly those tied to proof-of-work mining, require large amounts of electricity, contributing to higher amounts of carbon pollution when powered by dirty energy sources.
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At the same time, industry advocates note that crypto miners are increasingly turning to renewable energy and that blockchain-based financing tools could help channel investment into clean energy projects. As the space evolves, the climate implications remain complex and highly dependent on how and where these systems operate.
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