The crypto space has been pretty turbulent lately. As soon as the new regulations landed in Hong Kong, retail investors were no longer able to buy USDT, while things are even tougher on the mainland—stablecoin trading has now been explicitly defined as illegal financial activity.

Let’s start with the mainland. Just this year, there have been over 300 related cases investigated, with intercepted funds totaling 4.6 billion. This level of enforcement isn’t just a warning—it’s clearly a cleanup. Many speculate that this is paving the way for the digital yuan, clearing the field so the "official players" can step in.

Hong Kong is taking a different approach. Tether didn’t get a license, which means regular retail investors have completely lost access to buy USDT; now, only professional investors can touch it. This model is basically using high entry barriers to filter participants—they want to steer stablecoins into real-world use cases like cross-border trade and tourism, rather than letting retail investors use them to speculate.

What will happen in the market after these moves? First, USDT trading volume on the mainland will definitely shrink dramatically, with funds either flowing into the digital yuan or seeking other compliant outlets. Second, more transparent and compliant stablecoins like USDC might see new opportunities. Lastly, Hong Kong is clearly setting up a "premium compliance" experimental zone, aiming to attract big institutions.

When the largest stablecoin gets restricted in its core market, it could signal the start of a new round of reshuffling. Will Hong Kong’s regulatory experiment become a new channel for mainstream capital? Or will it just push funds elsewhere?

What do you all think the market will do next?