The Hong Kong Monetary Authority officially announced the implementation of new stablecoin regulatory regulations starting from August 1. This move will undoubtedly have a profound impact on the Digital Money market. The regulations not only restrict retail investor participation but also impose severe penalties for violations, including fines of up to 5 million HKD and imprisonment for 7 years.

The warning from the Monetary Authority's Chief Executive, Yu Weiman, has attracted widespread attention. He clearly stated that retail investors holding certain Digital Money may violate the law, which undoubtedly cools the market. It's worth noting that the jurisdiction of the new regulations is not limited to local Hong Kong; even foreign issuers promoting stablecoins pegged to the Hong Kong dollar to Hong Kong users will be subject to the Monetary Authority's regulation.

After the implementation of the new regulations, significant changes are expected to occur as follows:

First, retail investors will be significantly restricted from participating in the Digital Money market. Violators will face a fine of HKD 100,000 per day, which will undoubtedly deter many retail investors.

Secondly, the competition among institutions for licenses will become even more intense. Currently, 50 institutions have applied for licenses, but the Monetary Authority has stated that it will only issue a single-digit number of licenses in the initial stage, making the competition extremely fierce.

Furthermore, entering a regulatory sandbox does not necessarily mean that a license will be obtained. Some well-known companies, such as JD.com, Standard Chartered Bank, and Yuan Coin Technology, have entered the sandbox for testing, but Yu Weimen emphasized that this does not equate to being able to obtain a license.

Finally, the new regulations pose a huge challenge to the survival of small and medium-sized institutions. The requirement of 25 million HKD in paid-in capital, high liquidity reserves, and strict anti-money laundering regulations make it difficult for many small and medium-sized stablecoin issuers to survive, and industry reshuffling is inevitable.

Yu Weiwen also pointed out the problems currently existing in the industry. He believes that the market is overly enthusiastic and that the bubble is obvious. He emphasized that stablecoins should not be seen as speculative tools, but should return to their essential function as payment tools.

The introduction of this series of regulatory measures is aimed not only at curbing market speculation but also at promoting the healthy development of the Digital Money industry. Although it may bring certain shocks to the market in the short term, in the long run, it will help establish a more standardized and secure Digital Money ecosystem.