Hong Kong’s OTC crypto market shrank by 33% just one week after the stablecoin regulations took effect
Hong Kong’s Stablecoin Ordinance officially came into effect on August 1, 2025. The regulation sets out strict rules for the issuance and operation of stablecoins, explicitly prohibiting any offering, promotion, or sale of stablecoins without a license. No transitional period has been provided.
As businesses specializing in the exchange between stablecoins and fiat currencies, Hong Kong’s local OTC were among the first to feel the impact. Following the enactment of the ordinance, several OTC service providers announced the suspension of stablecoin-related operations while they prepare to apply for licenses.
This article aims to provide a blockchain-based perspective on the impact of the ordinance by disclosing TRC20-USDT outflow data from the address of Hong Kong’s OTC service provider (HKVAOTC) over the past 70 days, offering insights for regulatory authorities.
Data Description
Bitrace has been conducting long-term monitoring of traffic at business addresses of VAOTC entities located in Hong Kong or primarily serving Hong Kong clients. These entities are categorized into two types: storefront-based providers serving offline or verified clients, and non-storefront providers serving online or anonymous clients.
The disclosed data in this investigation covers TRC20-USDT outflows from all service providers during two time periods: June 1 to July 31, 2025, and August 1 to August 8, 2025 (Beijing Time).
All data presented have excluded non-commercial intermediary transfers between business addresses.
OTC Stablecoin Trading Volume Drops by 32.94%
From June 1 to July 31, all business addresses collectively transferred out 3.17 billion USDT, with a daily average of 52.04 million USDT. From August 1 to August 8, the total outflow was 279 million USDT, with a daily average of 34.90 million USDT.
Compared to the period before the ordinance took effect, the overall scale of the stablecoin exchange market dropped by 32.94% after August 1. This level of sensitivity indicates the profound impact the ordinance has had on Hong Kong’s local crypto industry.
Storefront-based service providers saw a greater decline in scale
Traffic statistics were compiled separately for the business addresses of storefront-based and non-storefront-based service providers.
After the ordinance took effect, the daily average USDT outflow from storefront-based service provider addresses decreased by 43.20% (from 9.47M to 5.38M), while the outflow from non-storefront-based service provider addresses decreased by 30.65% (from 42.57M to 29.52M).
The impact on storefront-based service providers was significantly greater than that on non-storefront providers, indicating a trend of certain OTC merchants in Hong Kong shifting underground in the short term following the implementation of the ordinance.
Conclusion
The introduction of the Stablecoin Ordinance marks a significant step forward in the compliance of Hong Kong’s crypto industry, with a notable short-term impact on the local OTC service sector. Among industry participants, some have chosen to follow regulatory requirements and apply for licenses, while others have shifted to underground operations, reflecting a divergence in response.
As a leading RegTech company, Bitrace will continue to monitor and disclose data on Hong Kong’s crypto OTC service industry.
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