Stablecoin companies operating in Hong Kong posted duplicate digits on Friday amid local regulatory shifts and a broader market correction.
Bright Smart Securities & Commodities Group fell almost 20% On Friday, according to Google Finance data. Yunfeng financial group Fall More than 16% during the trade session, while the Gotai Junin International Holdings Slid 11% and OSL Group declined 10.5%.
These companies are referred to as the “Hong Kong Stablecoin-conscept Company,” with sharing prices driven by exposure to stablecoin issuance, precautions, trading, or related infrastructure. However, some local experts viewed the correction as a positive market adjustment.
This is “a healthy correction,” said Allen Huang, a senior stablecoin policy researcher at the Hong Kong University of Science and Technology. “There are signs that the Frenzy of Stablecoin has evolved to other financial markets including the equity market,” Huang told cointelegraph.
The correction came in the midst of a broader collapse in financial markets in Hong Kong. Hang Seng Index closed more than 1% on Friday, while Hang Seng Smallcap Index fell 1.54% in the session. Hang Seng Tech Index lost 1.02%.
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A healthy correction in the market
The fall in the stocks follows the entry of Hong Kong a six -month transition period with special policies such as transferring its its Stablecoin’s new plot. New regulations come too Plans to Criminalize Stablecoin’s not license in the region.
Huang is far from the sole expert who believes that this sale-off is just a good market.
“The seller in the stock of ‘Stablecoin Concept’ is a rational market correction following the months of speculation that is extremely enthusiastic,” said Xu Han, director of Liquid Fund in the Hong Kong-liceny exchange Hashkey Group.
He explained that the regulation of regulation, including the one-on-one reserve, one-day redemption and a minimum capital of Hong Kong’s 25 million dollars ($ 3.18 million), “is a deliberate approach to prioritizing systematic stability and credibility.” He graduated:
“The correction filtered short-term speculation, allowing the start of strong players to claim Hong Kong’s reputation as a global trusted digital asset hub.”
“The sale today in the ‘Stablecoin concept’ sharing is likely a healthy correction after speculative acquisitions,” said Niko Demchuk, head of compliance with the crypto forensics firm along with Hong Kong Operations, AMLBOT. According to Demchuk, the high licensing requirements and the challenges faced by smaller companies are also weighing a “market recalibration.”
Shukyee Ma, chief strategy official based in Hong Kong with the real-world asset tokenization company Plume, who seems to agree with other experts. He concluded that “this collapse represents a healthy correction in the market driven by the acquisition of income and regulatory clarity.”
Related: China’s JD.com registers ‘Jcoin’ leading the Hong Kong Stablecoin regime
Many are expected to leave the career
Huang said, along with new policies in the area, “some institutions considering -Stablecoin testing may decide not to proceed with the process.” He said the early group of license holders would benefit from first-mover’s advantages, citing network effects and scale economies. He added:
“For those who do not expect to be included in the first batch, they will deal with a powerful battle, changing their cost benefit assessment. It is also a way to increase the likelihood that license holders will have commercial success.”
Ma said the regulation period would see small companies or those seeking stablecoins for the speculation to pause their efforts or move to the constituents. However, he hopes that funded players will follow the guidelines and bring compliance costs.
Both Demchuk expects the six-month period of regulatory transfer to “drive capital integration with the stablecoin providers,” which only leads to some licenses released. He also expects banks, acting as carers, to prioritize partnerships with license frontrunners, which will further restore the market to the larger gives.
Competition with Hong Kong and US Stablecoin
Huang said that “in the short run, it is unlikely that the amount of Hong Kong dollar supported by Stablecoins is comparable to the dollar -supported dollar.” However, MA points out that China has the second largest part of the market in terms of exporting, adding:
“Strict policies benefit those who provides HKD-stablecoin because they are set as the main provider of a viable stablecoin settlement for international trade.”
Demchuk added that Hong Kong Stablecoins “can get a strategic edge on cross-border and defi payments by seizing” the status of the financial hub and strict regulation. However, he said that “significant volume growth in the DEFI or payment was not likely before 2027, as market adoption and infrastructure develop.”
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