Hong Kong Secretary for Financial Services and the Treasury Thomas Hui said that Hong Kong has not yet adopted regulations on stablecoins such as Tether (USDT) or US Dollar Coin (USDC), which means that retail investors are not allowed to trade these assets. The official commented on Hong Kong’s cryptocurrency regulation during an online investment committee meeting on October 6, local news agency Ming Pao reported.

Hui said stablecoins such as USDT have been widely used by cryptocurrency service providers as their primary trading assets because their value is designed to be stable by being pegged to assets such as the U.S. dollar or gold. However, the secretary pointed out that some stablecoins have faced severe volatility issues and even crashes in the past, adding that the reserve management of stablecoins has greatly affected the price stability of investors’ rights to redeem fiat currency.

Given these risks, retail trading of stablecoins will not be allowed until Hong Kong officially regulates stablecoins, Hui reportedly claimed. Hui also mentioned that the shut down local cryptocurrency exchange JPEX was involved in a serious fraud case, reflecting the need for higher regulation of the cryptocurrency market.