Hong Kong Crypto Assets concept stocks face a bloodbath! Boya plummets over 6%, the Central Bank of China cracks down on Cryptocurrency Trading.

Bitcoin fell below the 87,000 USD mark, compounded by the Central Bank of China issuing strict controls over encryption, dragging down the performance of Hong Kong's crypto asset concept stocks across the board. Boyaa Interactive (0434) dropped 6.7%, OK Group Chain (1499) fell 9.7%, and Yunfeng Financial (0376) decreased 11.3%. The Central Bank of China rarely mentioned stablecoins in a meeting, stating that there are risks of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers.

Crypto Assets concept stocks plummet across the board, Hong Kong's three giants suffer heavy losses

(Source: Google Finance)

Bitcoin has once again fallen below the $90,000 mark, alongside the People's Bank of China reiterating its strict control over encryption, dragging down the performance of Crypto Assets concept stocks across the board. Boyaa Interactive (0434) dropped 6.7%, OKC Cloud Chain (1499) fell 9.7%, and Yunfeng Financial (0376) decreased by 11.3%. These three companies are major Crypto Assets concept stocks in the Hong Kong market, and their businesses are more or less related to the virtual currency industry.

Although Boyaa Interactive's main business is game development and operation, the company has publicly expressed interest in blockchain technology and the Crypto Assets field, and has made relevant investments. A decline of 6.7% is relatively mild, but considering that its business does not rely entirely on Crypto Assets, this decline already indicates the market's sensitive reaction to policy risks.

The 9.7% drop of OK Cloud Chain (1499) is even more severe. OK Cloud Chain is an affiliate of OK Group, the parent company of the CEX exchange, focusing on the research and application of blockchain technology. As one of the publicly traded companies most directly related to the virtual currency industry, OK Cloud Chain is extremely sensitive to policy changes. The nearly 10% single-day drop indicates strong investor concerns about the upgrade of regulations in China.

The 11.3% drop of Yunfeng Financial (0376) is the most severe among the three. Yunfeng Financial is a comprehensive financial services company, and although its core business is wealth management and investment banking services, the company is also involved in investment activities related to Crypto Assets. The drop of over 11% may reflect the market's zero tolerance attitude towards financial institutions venturing into the virtual currency space.

Hong Kong Stock Cryptocurrency Concept Stocks Plummet Ranking

Yunfeng Financial (0376): Down 11.3%, comprehensive financial services company

OKExChain (1499): Down by 9.7%, a CEX affiliated company, blockchain technology firm.

Boya Interactive (0434): Down 6.7%, a gaming company involved in blockchain investment.

This kind of overall sharp decline pattern shows that the market interprets the People's Bank of China's meeting as a clear signal of policy tightening. Hong Kong stock investors are highly sensitive to Chinese policies, as many companies listed in Hong Kong have their main business and revenue sources in mainland China. Once the policy environment deteriorates, these companies' operations will be directly impacted.

The decline of crypto assets concept stocks is further hit by the weakening price of Bitcoin. Bitcoin has temporarily dropped nearly half a percent, currently reported at 86,501 USD, having fallen below the important psychological barrier of 90,000 USD. As a benchmark for the crypto assets market, the price trend of Bitcoin directly affects the sentiment and capital flow of the entire industry. When the price of Bitcoin declines, the entire crypto assets ecosystem will be negatively impacted, and related concept stocks are naturally hard to escape.

The People's Bank of China Joint Action by 13 Departments Upgraded

The People's Bank of China held a coordination meeting to combat speculation in virtual currency trading, attended by responsible persons from the Ministry of Public Security, the Central Cyberspace Affairs Commission, the Central Financial Office, the Supreme People's Court, the Supreme People's Procuratorate, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Justice, the People's Bank of China, the State Administration for Market Regulation, the National Financial Regulatory Administration, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange. The joint action of these 13 departments is extremely rare, demonstrating the Chinese government's high concern regarding the risks of virtual currencies.

The meeting emphasized that virtual currencies do not have the same legal status as fiat currencies, do not have legal tender status, and should not and cannot be used as currency for circulation in the market. Activities related to virtual currencies are considered illegal financial activities. This statement is consistent with the 2021 “Notice,” but the number of participating departments has increased from 10 to 13, indicating an escalation in the crackdown.

The simultaneous participation of the Ministry of Public Security, the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Justice, four core judicial institutions, signifies that future crackdowns on illegal criminal activities related to virtual currencies will be more severe and systematic. The Ministry of Public Security is responsible for investigation, the Procuratorate for prosecution, the Court for trial, and the Ministry of Justice for enforcement. This complete judicial chain ensures comprehensive coverage from discovery to punishment.

The meeting stated that, in accordance with the requirements of the “Notice on Further Preventing and Dealing with the Risks of Speculation in Virtual Currency Transactions” jointly issued by the People's Bank of China and ten other departments in 2021, it is necessary to resolutely combat speculation in virtual currency trading, rectify the chaos of virtual currencies, and achieve significant results. Recently, due to various factors, speculation and trading in virtual currencies have risen, and related illegal activities have occurred from time to time, facing new situations and challenges in risk prevention and control.

This statement acknowledges the resurgence of speculative trading in virtual currencies during the 2024-2025 bull market. Although China implemented strict bans as early as 2021, the price of Bitcoin broke historical highs in 2024, driving prosperity in the entire Crypto Assets market. This wealth effect attracted a large number of Chinese investors to continue participating in coin trading through VPNs, overseas exchanges, and other channels, triggering a new round of concerns from regulatory authorities.

The Deep Meaning of Stablecoins Being Named Individually for the First Time

The meeting emphasized that activities related to virtual currency are classified as illegal financial activities, and that stablecoins are at risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers. The meeting rarely stated that stablecoins are a form of virtual currency, which currently cannot effectively meet the requirements for customer identification, anti-money laundering, and other aspects, and there is a risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers.

This is the first time that Chinese regulatory agencies have clearly singled out stablecoins. In the past, stablecoins such as USDT and USDC were also considered virtual currencies, but they were often generically grouped together with Bitcoin, Ethereum, and others. This meeting listed stablecoins separately and elaborated on their risks, showing a significant increase in regulatory agencies' attention to stablecoins.

Why have stablecoins become a new regulatory target? The main reason is their widespread use in actual illegal criminal activities. Compared to the price volatility of Bitcoin and Ethereum, stablecoins like USDT are pegged to the US dollar at a 1:1 ratio, making their prices stable, which makes them the preferred tool for underground money houses, fraud groups, and money launderers. In many cases of cross-border fund violations, USDT has replaced traditional underground remittance as the primary channel.

Unable to effectively meet customer identification, anti-money laundering, and other requirements, this statement points to the anonymity features of stablecoins. Although USDT's issuer Tether claims to cooperate with law enforcement investigations, in reality, a large number of USDT transactions occur in decentralized environments, making it difficult to carry out effective KYC (Know Your Customer) and AML (Anti-Money Laundering) regulation. This regulatory blind spot is something the Chinese government cannot tolerate.

For cryptocurrency concept stocks, the impact of stablecoins being named may be more far-reaching than curbing Bitcoin speculation. Many companies involved in the virtual currency business primarily revolve around the exchange and settlement of stablecoins such as USDT. If regulatory bodies begin to focus on cracking down on stablecoin-related businesses, the core revenue sources of these companies could be cut off. This expectation of deteriorating fundamentals is the deeper reason for the sharp decline in cryptocurrency concept stocks.

Bitcoin falls below $90,000 due to both technical and emotional factors

Bitcoin has temporarily dropped nearly half a percent, currently reported at 86,501 USD, having fallen below the important psychological level of 90,000 USD. From a technical analysis perspective, 90,000 USD is a key integer support level and also the lower edge of the previous consolidation area. Falling below this level not only signifies a technical breakdown but, more importantly, impacts market sentiment.

Bitcoin has fallen from around $110,000 in early November to the current $86,501, a decline of about 21%. Such a degree of retracement is common in the Crypto Assets market, but considering that Bitcoin has just set a new all-time high, the psychological impact of this retracement is particularly strong. Many investors who bought in at high prices are facing losses, and the closing of profit positions has also intensified the selling pressure.

The decline in Bitcoin prices has created a double whammy with the tightening of Chinese policies. On one hand, the technical breakdown of Bitcoin triggered stop-loss orders and technical selling pressure. On the other hand, news from the meeting of 13 departments in China raised concerns about policy risks, further dampening market sentiment. This dual effect of technical and emotional factors led to a decline in crypto assets concept stocks that surpassed the decline of Bitcoin itself.

For cryptocurrency concept stocks in the Hong Kong stock market, the impact of Chinese policies is more direct. Although these companies are listed in Hong Kong, their actual business or investment targets are often related to the Chinese market. When China clearly expresses its stance to crack down on virtual currency-related businesses, the business prospects of these companies will face fundamental uncertainty. The market votes with its feet, selling off these high-risk stocks, leading to today's sharp decline.

Assessment of the Long-Term Prospects of Crypto Assets Concept Stocks

The meeting requested that all units deepen cooperation, improve regulatory policies and legal bases, focus on key links such as information flow and capital flow, strengthen information sharing, further enhance monitoring capabilities, rigorously crack down on illegal criminal activities, protect the safety of people's property, and maintain the stability of the economic and financial order. This all-encompassing and multi-level crackdown system poses extremely high compliance risks for cryptocurrency businesses within China or related to the Chinese market.

For investors in Crypto Assets concept stocks, it is necessary to reassess the long-term value of these companies. If a company's main source of revenue relies on virtual currency related businesses within China, then under the current policy environment, this business model is unsustainable. Even if the company attempts to shift to overseas markets, it will face multiple challenges in technology, compliance, and market development.

However, some cryptocurrency concept stocks may find a path for transformation. For example, shifting the business focus from coin trading to blockchain technology research and application, or completely exiting the virtual currency field and returning to traditional business. Boyaa Interactive, as a gaming company, does not rely on virtual currency for its core business, so transformation is relatively easy. However, for companies like OK Blockchain that are deeply involved in blockchain and virtual currency, the difficulty and cost of transformation will be very high.

Investors need to differentiate the depth of the relationship between companies and virtual currencies when evaluating Crypto Assets concept stocks. Companies that directly operate virtual currency exchanges, OTC businesses, or mining basically have no room for survival under the Chinese policy environment. However, those that only hold virtual currency investments or apply blockchain technology to other fields may still have room for development. The key lies in whether the company can find a sustainable business model under compliance.