Hong Kong-listed companies with stablecoin exposure saw dramatic declines as the city's new regulatory framework took effect this week. While share prices tumbled up to 20%, financial analysts characterize the sell-off as a necessary market adjustment rather than a crisis.

Sharp Declines Across Crypto-Linked Stocks

Friday's trading session witnessed significant drops among firms connected to digital asset services. Bright Smart Securities led the downturn with 【19.8%】 decline, followed by Yunfeng Financial's 【16.2%】 slide. Guotai Junan International and OSL Group completed the downward trend with 【11%】 and 【10.5%】 decreases respectively.

——This correction reflects market rationality after months of speculative excess,—— noted Xu Han of HashKey Group. The sell-off coincided with broader market weakness, as Hong Kong's Hang Seng indices fell between 1-1.5%.

Regulatory Transition Sparks Market Realignment

The volatility follows Hong Kong's implementation of strict stablecoin rules requiring:

• Full 1:1 reserve backing
• 24-hour redemption guarantees
• Minimum capital of HK$25 million ($3.18M)

Niko Demchuk of AMLBot observed ——the licensing hurdles are reshaping the competitive landscape—— with smaller players likely exiting the market. Industry sources suggest only well-capitalized firms will meet the new requirements.

Long-Term Outlook Remains Positive

Despite short-term turbulence, experts anticipate Hong Kong's rigorous approach will ultimately strengthen its position in digital finance. Allen Huang from HKUST predicts first-mover advantages for compliant firms, while Plume's Shukyee Ma sees potential for Hong Kong dollar-pegged stablecoins in international trade settlements.

The regulatory transition period runs through January 2026, during which authorities will evaluate license applications. Market observers expect final approvals to concentrate among major financial institutions rather than crypto-native startups.

——The current volatility represents growing pains for a maturing market,—— Huang concluded, emphasizing that the rules aim to prevent systemic risks while fostering sustainable growth in Hong Kong's digital asset ecosystem.