The implementation of Hong Kong's Stablecoin Ordinance marks a major step toward compliance in the crypto industry, with immediate and significant impacts on local over-the-counter (OTC) trading services.

Hong Kong's Stablecoin Ordinance (hereinafter referred to as the "Ordinance") officially took effect on August 1, 2025, imposing strict rules on the issuance and operation of stablecoins. It explicitly prohibits unlicensed offerings, promotions, and sales of stablecoins—without providing any transition period.

Cryptocurrency exchange shops, whose core business revolves around stablecoin-fiat conversions, were the first to feel the impact. Following the Ordinance's enactment, multiple OTC service providers suspended stablecoin-related operations while awaiting licensing approvals.

This report examines the Ordinance’s influence through TRC20-USDT outflow data from Hong Kong OTC service providers (HKVAOTC) over the past 70 days, offering an on-chain perspective for regulators.

Bitrace has long monitored transaction flows from Hong Kong-based VAOTC entities, which fall into two categories:

1. Storefront providers: Primarily serve offline or KYC-verified clients.

2. Non-storefront providers: Cater to online or anonymous users.

The disclosed data covers TRC20-USDT outflows from all providers across two periods:

• June 1 – July 31, 2025 (pre-regulation)

• August 1 – August 8, 2025 (post-regulation)

Note: Non-business transfers between addresses have been excluded.

• Pre-regulation (June 1–July 31): Total outflow of 3.17B USDT (~52.04M USDT daily).

• Post-regulation (August 1–8): Total outflow of 279M USDT (~34.90M USDT daily).

This represents a 32.94% decline in stablecoin exchange volume, underscoring the Ordinance’s profound impact on Hong Kong’s crypto ecosystem.

A breakdown by provider type reveals stark contrasts:

• Storefront providers: Daily outflows fell 43.20% (9.47M → 5.38M USDT).

• Non-storefront providers: Daily outflows dropped 30.65% (42.57M → 29.52M USDT).

The sharper contraction among storefront operators suggests a shift toward underground operations post-regulation, as some businesses evade compliance.

The Stablecoin Ordinance signifies a critical move toward regulatory maturity in Hong Kong’s crypto sector, with immediate repercussions for OTC services. Market participants have diverged in response:

• Some are pursuing licenses to operate legally.

• Others are going underground to circumvent oversight.

As the dust settles, the long-term effects on market transparency and investor protection remain to be seen.

The implementation of Hong Kong's Stablecoin Ordinance marks a major step toward compliance in the crypto industry, with immediate and significant impacts on local over-the-counter (OTC) trading services.

Hong Kong's Stablecoin Ordinance (hereinafter referred to as the "Ordinance") officially took effect on August 1, 2025, imposing strict rules on the issuance and operation of stablecoins. It explicitly prohibits unlicensed offerings, promotions, and sales of stablecoins—without providing any transition period.

Cryptocurrency exchange shops, whose core business revolves around stablecoin-fiat conversions, were the first to feel the impact. Following the Ordinance's enactment, multiple OTC service providers suspended stablecoin-related operations while awaiting licensing approvals.

This report examines the Ordinance’s influence through TRC20-USDT outflow data from Hong Kong OTC service providers (HKVAOTC) over the past 70 days, offering an on-chain perspective for regulators.

Bitrace has long monitored transaction flows from Hong Kong-based VAOTC entities, which fall into two categories:

1. Storefront providers: Primarily serve offline or KYC-verified clients.

2. Non-storefront providers: Cater to online or anonymous users.

The disclosed data covers TRC20-USDT outflows from all providers across two periods:

• June 1 – July 31, 2025 (pre-regulation)

• August 1 – August 8, 2025 (post-regulation)

Note: Non-business transfers between addresses have been excluded.

• Pre-regulation (June 1–July 31): Total outflow of 3.17B USDT (~52.04M USDT daily).

• Post-regulation (August 1–8): Total outflow of 279M USDT (~34.90M USDT daily).

This represents a 32.94% decline in stablecoin exchange volume, underscoring the Ordinance’s profound impact on Hong Kong’s crypto ecosystem.

A breakdown by provider type reveals stark contrasts:

• Storefront providers: Daily outflows fell 43.20% (9.47M → 5.38M USDT).

• Non-storefront providers: Daily outflows dropped 30.65% (42.57M → 29.52M USDT).

The sharper contraction among storefront operators suggests a shift toward underground operations post-regulation, as some businesses evade compliance.

The Stablecoin Ordinance signifies a critical move toward regulatory maturity in Hong Kong’s crypto sector, with immediate repercussions for OTC services. Market participants have diverged in response:

• Some are pursuing licenses to operate legally.

• Others are going underground to circumvent oversight.

As the dust settles, the long-term effects on market transparency and investor protection remain to be seen.