Companies looking to issue stablecoins should rein in their enthusiasm, especially when their main business is unrelated to digital assets, Hong Kong Monetary Authority (HKMA) CEO Eddie Yue, wrote in a blog post on the central bank’s website.
Some companies that don’t have a business that is related to stablecoins — tokens whose value is pegged to other assets such as fiat currencies — or digital assets have announced their intention to develop a stablecoin business. As a result, “stock prices have risen, stock trading volume has increased, and the company’s reputation has also been greatly improved,” Yue said in the Wednesday post.
“With the recent hot speculation of the stablecoin concept, the market has become overly excited,” he wrote.
The financial regulator’s cooling note come as it is set to start licensing stablecoin issuers from Aug. 1 after passing a stablecoin bill in May. While 40 firms are set to apply for the regime, the HKMA is likely to approve fewer than 10.
“In fact, we have made it clear earlier that at most only a few stablecoin licenses will be approved in the initial stage,” Yue said. “In other words, there are many disappointed people.”
After the passage of the stablecoin bill, the regulator sought opinions on implementing its regulation and money laundering guidelines, something which it plans on publishing by the end of July, he added.
The market capitalization of stablecoins climbed to more than $269 billion, according to CoinGecko data, following the signing into law of the U.S.’ GENIUS stablecoin bill last week.