A Hong Kong official has stressed that the trading of retail stablecoins is prohibited in the jurisdiction until the policy relating to such virtual assets is introduced, local media reported on Oct. 6.

Christian Hui, Hong Kong’s Secretary for Financial Services and the Treasury, made the remarks on cryptocurrency regulation during an online investment committee meeting, local news agency Ming Pao reported.

Stablecoins have become a popular trading asset for cryptocurrency service providers due to their stable value, which is linked to the US dollar or gold. However, Hui noted that some stablecoins have experienced significant volatility and even collapsed in the past. The secretary emphasized that the management of reserves for stablecoins greatly affects investors' ability to redeem fiat currencies and maintain price stability.

Stablecoin retail trading is prohibited in Hong Kong until official regulations are put in place, according to Hui.

The report also said that Hui brought up the topic of a local cryptocurrency exchange called JPEX, which had been closed down due to allegations of operating without a proper license and being involved in a significant fraud case. This instance highlights the importance of increased regulation and supervision of the cryptocurrency market.

In addition to Bitcoin (BTC) and Ether (ETH), new cryptocurrencies for retail trading require the approval of Hong Kong’s Securities Regulatory Commission, Hui reportedly said.

Market participants remain bullish for the crypto sector in Hong Kong amid regulatory progression and increased funding. On Oct. 4, the South China Morning Post reported that locally-based crypto venture capital firm CMCC Global raised $100 million for its “Titan Fund.” The latest round for the crypto fund, which aims to support Asian blockchain startups, involved 30 investors, including blockchain firm Block.one, Pacific Century Group, Winklevoss Capital, and Animoca Brands founder Yat Sui.