Quantum Updates 46 | May 2025

Hong Kong Government Enacts Stablecoins Ordinance: Launches Licensing Regime to Regulate Fiat-Referenced Issuers and Digital Asset Ecosystem

On 21 May 2025, the Government of the Hong Kong Special Administrative Region announced the passage of the Hong Kong Stablecoins Bill by the Legislative Council, officially enacting the Hong Kong Stablecoins Ordinance. This legislation introduces a comprehensive licensing framework for fiat-referenced stablecoin (FRS) issuers and forms the cornerstone of Hong Kong’s expanding regulatory infrastructure for virtual assets.

• The Hong Kong Stablecoins Ordinance mandates that any entity issuing fiat-referenced stablecoins in or linked to Hong Kong must obtain a licence from the Hong Kong Monetary Authority (HKMA), regardless of the issuer’s geographic location.
• Licensees are required to comply with a full suite of regulatory obligations, including reserve asset management, client fund segregation, redemption at par, and robust stabilisation mechanisms, alongside AML/CTF standards, disclosure norms, audit obligations, and corporate governance controls.
• A six-month non-contravention period has been provided, during which unlicensed activity will be permitted for transitional compliance, but advertising will be restricted solely to licensed offerings to safeguard against fraud and misrepresentation.
• The HKMA, in consultation with the Financial Services and the Treasury Bureau (HK FSTB), will conduct further technical consultations to operationalise the licensing standards and supervision protocols.
• Only licensed institutions will be authorised to issue or promote stablecoins to the public in Hong Kong, providing legal clarity and consumer protection across the digital asset value chain.
• The Hong Kong Stablecoins Ordinance will come into effect later this year, allowing firms time to align operations with licensing requirements and prepare compliance documentation.
• Following this legislative milestone, the Hong Kong Government will soon launch public consultations on the regulation of over-the-counter virtual asset services and digital asset custodians, and will release a second policy statement outlining its long-term virtual asset development strategy.

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FINMA AI Survey 2025: Half of Swiss Financial Institutions Adopt AI Amid Rising Outsourcing and Governance Risks

On 24 April 2025, the Swiss Financial Market Supervisory Authority (FINMA) published a Press release providing the findings of its AI adoption survey which revealed a marked acceleration in artificial intelligence deployment across Switzerland’s financial sector. The survey was conducted between November 2024 and January 2025, covering approximately 400 financial regulated entities and the survey provides insights into AI use cases, governance models, outsourcing risks, and FINMA’s supervisory stance on AI and impact of emerging technologies.

• Around50% of Swiss financial institutions are actively using AI in operations, with another 25% planning adoption within the next three years. Larger firms lead adoption, while smaller entities often depend on external providers and outsourced AI solutions.
• On average, Swiss financial institutions report five AI applications currently in use and nine under development, with 91% of adopters integrating generative AI models, including tools like ChatGPT, reflecting a growing reliance on BigTech platforms.
• FINMA notes that AI is now embedded in institutional strategies for nearly half of all respondents, demonstrating its significance across the banking, insurance, asset management, and market infrastructure sectors.
• Most institutions apply existing governance frameworks to AI oversight, prioritising data protection, cybersecurity, data quality, model explain ability, and enterprise risk management as key areas of control.
• FINMA identified few major supervisory concerns related to AI use in financial institutions as:
  • Inadequate data quality and explain ability of AI outputs.
  • Cybersecurity and data protection risks tied to model training and deployment.
  • Growing dependency on third-party providers, exacerbating outsourcing risk, an issue highlighted in FINMA’s 2024 Risk Monitor.
• In alignment with its2025–2028 strategic plan, FINMA reaffirms a technology-neutral supervisory approach, guided by the principle of “same business, same risks, same rules.”
• FINMA’s AI Guidance 08/2024 mandates that firms consult the Swiss regulator prior to deploying AI in business functions, such as risk modelling, capital requirement calculations, or client-interfacing automation, underscoring the need for early supervisory dialogue.

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US SEC and Ripple Labs Agree on Conditional Resolution of Longstanding Enforcement Dispute Parties Seek Indicative Ruling to Finalise Settlement over Unregistered XRP Sales

On 8 May 2025, the United States Securities and Exchange Commission (US SEC) and Ripple Labs, Inc. jointly filed a Settlement Agreement in the matter Securities and Exchange Commission v. Ripple Labs, Inc., et al. before the United States District Court for the Southern District of New York. The settlement agreement outlines a conditional framework to resolve the US SEC’s high-profile enforcement action concerning unregistered XRP token sales, originally filed in December 2020.

• The Settlement Agreement requests the court to issue an indicative ruling signalling whether it would dissolve the permanent injunction imposed on Ripple Labs under the Final Judgment dated 7 August 2024, which followed a finding that Ripple’s institutional XRP sales violated Section 5 of the United States Securities Act of 1933.
• The Final Judgment imposed a civil penalty of USD 125,035,150, now held in escrow. The proposed resolution seeks to split this amount: USD 50 million to be retained by the US SEC and USD 75,035,150 to be returned to Ripple Labs.
• If the court grants the indicative ruling, the parties will move for remand and request formal dissolution of the in junctionand release of escrowed funds. Both parties have agreed to dismiss their appeals pending before the Second Circuit upon execution of the court’s order.
• The Agreement cites Federal Rule of Civil Procedure 62.1, which enables trial courts to express willingness to amend judgments while appeals are pending, thereby providing a legal basis for this procedural approach.
• The US SEC explicitly stated that this settlement does not reflect an assessment of the merits of the enforcement action and shall not serve as precedent for other regulatory matters.
• The Commission characterised the agreement as consistent with its strategic intent to reform and renew its approach to crypto regulation, rather than a retreat from enforcement accountability.
• The final outcome hinges on judicial acceptance of the indicative ruling, without which the appeals and the injunction will remain in force. The parties await the District Court’s decision following the 8 May 2025 filing.
• The full text of the Settlement Agreement in SEC v. Ripple Labs, Inc., Case No. 1:20-cv-10832, is accessible via the docket of the United States District Court for the Southern District of New York.
• The settlement is contingent on the District Court of New York issuing the indicative ruling and a limited remand from the United States Court of Appeals for the Second Circuit to permit modification of the Final Judgment.

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Hong Kong SFC and Ontario Securities Commission Sign Landmark MoU to Boost Cross-Border Fund Supervision and Investment Management

On 13 May 2025, the Hong Kong Securities and Futures Commission (HK SFC) and the Ontario Securities Commission (OSC) of Canada signed a landmark Memorandum of Understanding (MoU) during the IOSCO Annual General Meeting in Doha, Qatar, establishing a regulatory framework to enhance bilateral cooperation in the oversight of collective investment schemes and asset managers operating across the two jurisdictions.

• The MoU facilitates regulatory consultation and supervisory information exchange between the HK SFC and Canada’s OSC, reinforcing oversight capabilities and enabling closer cross-border engagement on fund regulation.
• Following the signing, the HK SFC has officially included Ontario, Canada in its list of Acceptable Inspection Regimes, allowing OSC-licensed fund managers to serve as investment delegates for HK SFC-authorised funds.
• The agreement enables fund managers based in Ontario to operate within Hong Kong’s regulatory framework, satisfying the conditions of Note 5.1 under the HK SFC’s Code on Unit Trusts and Mutual Funds.
• This development creates a formalised pathway for OSC-regulated asset managers to access the Hong Kong market and vice versa, enhancing global portfolio management flexibility and facilitating regulatory recognition.
• HK SFC CEO Julia Leung described the MoU as a pivotal move to bolster regulatory ties and deepen market connectivity amid global uncertainty.
• OSC CEO Grant Vingoe welcomed the collaboration, and stated that it will support market growth, enhance investor confidence, and open new opportunities for regulated firms in both jurisdictions.
• The MoU solidifies HK SFC’s strategy to international capital market linkages and create compliant channels for global delegation and fund management partnerships.
• The partnership provides institutional clarity and operational continuity for global asset managers seeking cross-border recognition and supervision under trusted legal frameworks across Asia and North America.

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Hong Kong SFC and Abu Dhabi’s ADGM FSRA Sign MoU to Strengthen Cross-Border Supervision of Investment Managers and Collective Investment Schemes

On 15 May 2025, the Securities and Futures Commission of Hong Kong (HK SFC) and the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) signed a Memorandum of Understanding (MoU) to formalise cross-border regulatory cooperation in the supervision of investment managers and collective investment scheme activity. The agreement was executed during the IOSCO Annual General Meeting in Doha, Qatar.

• The MoU establishes a formal bilateral framework for regulatory consultation, information exchange, and coordinated oversight of licensed entities engaged in fund management, investment advisory, and related cross-border services.
• Senior representatives in attendance included HK SFC CEO Julia Leung, Executive Director of Investment Products Christina Choi, and FSRA CEO Emmanuel Givanakis, from both jurisdictions.
• The MoU will enhance transparency, improve supervision, and align regulatory practices to facilitate more efficient fund delegation and cross-market fund structuring, such as master-feeder arrangements.
• This development aligns with the HK SFC’s ASPIRe roadmap, supporting international regulatory connectivity and Hong Kong as a capital conduit for Asia, while ADGM strengthens its role as a financial gateway bridging Europe, Africa, and Asia.
• FSRA CEO Emmanuel Givanakis supported stating it would foster mutual trust and improve cross-border oversight. HK SFC CEO Julia Leung described the agreement as a milestone in ‘building deeper regional connectivity’, enabling collaborative investment initiatives and expanding fund passporting capabilities across Hong Kong and the Middle East.
• The MoU will streamline licensing cooperation, support regulatory standards and expand access to both markets for licensed Investment Managers and Collective Investment Schemes.

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Hong Kong SFC Hosts High-Level Regulatory Dialogue with Lao Securities Commission and Lao Securities Exchange on Capital Market Strategy

On 20 May 2025, the Securities and Futures Commission of Hong Kong (HK SFC) hosted a senior delegation from the Lao People’s Democratic Republic for a co-operative dialogue on capital market development, supervisory practices, and regional regulatory cooperation. The engagement reflects Hong Kong’s commitment to deepening cross-border financial connectivity with emerging Southeast Asian markets.

• The Laotian delegation was led by Mrs. Phengsy Phengmuong, Secretary-General of the Lao Securities Commission Office (LSCO), and Mr. Siosavath Thirakul, CEO of the Lao Securities Exchange (LSX), and was welcomed by HK SFC CEO Ms. Julia Leung and senior executives.
• Technical exchange sessions focused on the HK SFC’s regulatory framework, market oversight protocols, sustainability initiatives, and investor education strategies, offering the Laotian delegation exposure to Hong Kong’s institutional experience.
• Both regulators shared insights on their domestic capital market structures, future strategic priorities, and regulatory approaches to promote investor confidence and economic growth.
• The HK SFC reaffirmed its role in regional capacity-building and knowledge transfer, providing Laos with a reference point for aligning market infrastructure and reform initiatives with global best practices.
• The dialogue established a foundation for future cooperation, including potential technical assistance, supervisory partnerships, joint training initiatives, and financial stability-oriented collaboration.

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US SEC Charges Unicoin and Top Executives in $100 Million Crypto Asset Fraud: Misleading Claims, Inflated Sales Figures, and Unregistered Offerings of Asset Backed Tokens

On 20 May 2025, the United States Securities and Exchange Commission (US SEC) filed Complaint No. 1:25-cv-04245 the U.S. District Court for the Southern District of New York against Unicoin, Inc. (formerly Transparent Business, Inc.) and four of its senior executives. The Commission alleges that Unicoin and its leadership orchestrated a global fraudulent offering of unregistered crypto rights certificates, raising over $100 million from more than 5,000 investors through a series of deceptive and materially misleading claims.

• The defendants named include Alexander Konanykhin (CEO and Board Chairman), Silvina Moschini (former President, current Board Member), Alejandro Dominguez (former Chief Investment Officer), and Richard Devlin (General Counsel).
• Between February 2022 and May 2025, Unicoin marketed “Unicoin Rights Certificates” as asset-backed, US SEC-compliant investment products granting rights to receive digital “Unicoins” in the future.
• The US SEC alleges that Unicoin falsely claimed these certificates were backed by billions in real estate and equity in pre-IPO companies. In reality, the company’s assets were worth only a fraction of those claims, and no registration had been filed with the Commission.
• The marketing campaign spanned multiple media platforms, including airports, taxis, television, and social media, falsely portraying Unicoin as a stable and secure investment linked to real-world value.
• Unicoin allegedly misrepresented its financial performance, inflating sales figures up to $3 billion when actual proceeds amounted to less than $110 million.
• The US SEC charged Unicoin and its executives with violations of Sections 5(a), 5(c), and 17(a) of the United States Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the United States Securities Exchange Act of 1934. Konanykhin is also charged under Section 20(a) as a control person.
• Moschini and Dominguez face charges for fraudulent misstatements, while Devlin is charged with negligent misrepresentations under Sections 17(a)(2) and 17(a)(3) of the United States Securities Act.
• The US SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with interest, civil penalties, and officer-and-director bars against Konanykhin, Moschini, and Dominguez.
• Devlin has agreed to settle, without admitting or denying the allegations, and will pay a $37,500 civil penalty and submit to a permanent injunction.
• US SEC Associate Director Mark Cave stated that Unicoin’s executives “exploited thousands of investors with fictitious promises,” and that the US SEC aims to hold them accountable for orchestrating a fraud based on “illusory” claims and fabricated valuations.
• The case is being litigated by Russell J. Feldman and Adam B. Gottlieb under the supervision of Jack Kaufman, following an investigation led by Adam B. Gottlieb, Jason D. Schall, and Joss Berteaud.

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Bitcoin Breaks $111K Barrier Amid Regulatory Shifts and Institutional Inflows

On 22 May 2025, Bitcoin crossed a new all-time high, trading above US $111,000, fuelled by favourable regulatory developments and a surge in institutional adoption. The price rally comes as leading financial institutions extend Bitcoin and spot Bitcoin ETF offerings to clients, driving more than $4 billion in inflows into the crypto market in May alone.

• The milestone reflects increasing investor confidence in Bitcoin as a store of value amid persistent inflation concerns and a weakening US dollar, further propelling interest in alternative, decentralised assets.
• The approval and launch of spot Bitcoin exchange-traded funds (ETFs) has significantly enhanced accessibility and credibility, enabling traditional finance to converge with the digital asset sector.
• Analysts note that while Bitcoin’s upward momentum remains robust, technical resistance around the $115,000 mark may slow the rally due to hedging activity by market makers.
• The rise in price coincides with global regulatory advances. The United States Securities and Exchange Commission (US SEC) is actively conducting Crypto Task Force roundtables to clarify rules on tokenisation, decentralised finance (DeFi), custody, and trading.
• In Asia, Hong Kong’s Stablecoins Bill has taken effect, establishing a licensing regime under the Hong Kong Monetary Authority (HKMA) for fiat-referenced stablecoin issuers, advancing institutional digital finance oversight.
• The United Kingdom is similarly reforming its regulatory framework through amendments to the Financial Services and Markets Act 2000, which now includes provisions to treat cryptoassets and stablecoins as regulated investments.
• Despite the historic milestone, analysts caution that the path forward remains sensitive to macroeconomic volatility, regulatory recalibrations, and global risk sentiment shifts.

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