Regulatory Intervention Halts Stablecoin Plans
Chinese technology giants have reportedly paused their stablecoin issuance plans in Hong Kong following intervention from Beijing regulators, according to multiple sources familiar with the situation. Companies including Ant Group and JD.com had previously expressed interest in participating in Hong Kong’s pilot stablecoin program but have now put these ambitions on hold.
The decision came after instructions from Chinese regulatory bodies including the People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC), sources indicate. Five people familiar with the matter stated that PBoC officials advised against participating in the initial stablecoin rollout due to concerns about private companies issuing any form of currency.
Central Bank’s Currency Authority Concerns
According to reports, regulators view privately issued stablecoins as potentially challenging the PBoC’s digital currency project, the e-CNY. One person with knowledge of the central bank’s briefings to tech groups confirmed this perspective, while another source highlighted the fundamental question at stake: “The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?”
Stablecoins, which are digital tokens pegged to fiat currencies like the US dollar, have become a cornerstone of cryptocurrency trading globally. The regulatory pushback from Chinese authorities demonstrates how regulators worldwide are responding to the rise of these digital assets, particularly after the Trump administration championed them as a pillar of mainstream finance.
International Context and Strategic Concerns
The report states that former Chinese vice-minister of finance Zhu Guangyao argued in June that “the strategic purpose behind the US promotion of stablecoins is to preserve dollar supremacy.” He emphasized the importance of responding to this financial challenge with renminbi-denominated stablecoins integrated into China’s national financial strategy.
Analysts suggest that Zhu’s comments reflected broader concerns among international policymakers. The European Central Bank has similarly expressed worries that widespread adoption of dollar stablecoins could hinder its monetary policy control, highlighting global apprehensions about these digital financial instruments.
Shift in Regulatory Posture
Sources indicate that financial regulators adopted a more cautious approach following a late August speech by former PBoC governor Zhou Xiaochuan. At the China Finance 40 Forum, Zhou urged thorough evaluation of stablecoins and their potential systemic risks, according to an article published by the state-backed think-tank CF40.
Zhou reportedly warned that “we need to be vigilant against the risk of stablecoins being excessively used for asset speculation, as misdirection could trigger fraud and instability in the financial system.” He also questioned the actual demand for tokenization technology and noted limited cost-cutting potential in current payment systems, particularly for retail payments.
Hong Kong’s Regulatory Framework
The Hong Kong Monetary Authority (HKMA) began accepting applications for stablecoin issuers in August, positioning the territory as a testing ground for mainland China. Despite initial enthusiasm from Chinese companies about the potential for renminbi-denominated stablecoins to boost the yuan’s international use, regulatory concerns have apparently taken precedence.
Industry observers note that this development reflects broader trends in financial technology regulation worldwide, as authorities grapple with balancing innovation against monetary sovereignty and financial stability concerns. The HKMA declined to comment on market rumors, while the PBoC, CAC, Ant Group, and JD.com did not respond to requests for comment, according to the report.
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