According to Sebastian Paredes, CEO of DBS Hong Kong, Hong Kong, the regulatory framework for Stablecoin in Hong Kong limits its use for derivative transactions in blockchain networks.
According to a report on Friday by local news outlet The Standard, Paredes said Hong Kong regulations and customer (KYC) requirements regarding Stablecoin Anti-Money Laundering (AML) will significantly limit the use of Onchain derivative transactions. He said the bank will monitor development, but instead will focus on building a wide range of stability capabilities in Hong Kong.
Comments follow the rollout of Hong Kong’s new Stablecoin rules on August 1st. The rules immediately criminalized promotion of licensed Stablecoins and established public registration of licensed issuers.
Others have also criticized Hong Kong’s ridiculous rules as being overly strict. When the framework was first introduced, Stablecoin companies operating in Hong Kong recorded double-digit losses due to stricter rules than expected.
Related: animoca and Standard Chartered Form Stablecoin Venture in Hong Kong
DBS is not new to cryptographic
According to regulatory filings, the local DBS branch is Hong Kong’s leading bank, which holds approximately $492 billion ($63.2 billion) as of last year. DBS is also the largest bank in Southeast Asia, totaling $8420 billion ($620 billion) in assets.
Banks have long been involved in blockchain technology and the crypto industry. Earlier this month, DBS, Franklin Templeton and Ripple joined forces to launch a tokenized trading and lending service for facility investors, leveraging the XRP ledger.
In late August, DBS also decided to expand its digital assets offering with the launch of tokenized structured notes on the Ethereum blockchain. The bank is also not a stranger to stablecoins, responsible for managing the US dollar reserves of the Global Dollar (USDG).
In late 2024, DBS announced the introduction of a new set of blockchain-powered services suites for institutional clients and the availability of commercial crypto options. The bank also launched a solution last year that uses blockchain technology to streamline government grant spending.
Related: Asian OSL Group raises $300 million for Stablecoin and Global expansion
Hong Kong stub coin hicculture
Hong Kong was bustling with stubcoin activities before and after local regulators adopted the new framework. When it came into effect when rules became stricter, Hong Kong Securities and Futures Commission (SFC) officials warned that the introduction of a new local stubcoin regulatory framework increased the risk of fraud.
The statement was mainly motivated by a speculative frenzy around the companies that announced their interest in obtaining a Stablecoin license. HSBC and ICBC report that proposals continued to be made that companies had retreated after being pressured by Chinese authorities after reporting that they had considered applying for a Stablecoin license.
In early August, Chinese authorities directed local businesses to stop publishing investigations and to hold seminars related to Stablecoins.
This was followed by a major report from local financial news outlet Kaisin that Chinese mainland companies operating in Hong Kong could be forced to withdraw from cryptocurrency-related activities.
magazine: China laughs Crypto Policies, Telegram’s new Dark Markets: Asia Express