When Hong Kong’s new stablecoin law took effect in August, dozens of tech and finance firms from the city and beyond rushed to apply for issuance licenses in pursuit of the fast mover advantage. However, Chinese tech giants have now been forced to put their ambitions on hold after Beijing stepped in and halted their plans.
The Financial Times (FT) reports that some of the top Chinese regulators have issued instructions to Alibaba (NASDAQ: BABA) and JD.com to suspend their stablecoin plans. Citing multiple sources familiar with the matter, FT says the orders came from the People’s Bank of China (PBoC) and the Cyberspace Administration of China.
The PBoC is spearheading the campaign and has instructed Chinese companies to refrain from the initial stablecoin rollouts in Hong Kong. Its primary concern centers on the risk of allowing tech companies to issue and control any type of currency.
This concern has long anchored governments’ opposition to digital assets and stablecoins. When Meta (NASDAQ: META) announced its Libra stablecoin (later rebranded to Diem), regulators in the United States and Europe united to halt the tech giant’s plans over concerns that it could threaten monetary stability and financial sovereignty.
These concerns are more pronounced in China, where the government retains tight control over the financial and tech sectors.
“The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?” one of the sources told FT.
Beyond monetary stability concerns, the PBoC also considers stablecoins to be a competitor to its central bank digital currency (CBDC) project. Once hailed as the next big thing, the digital yuan’s progress has plateaued, with the central bank pushing adoption mainly through limited pilots in major cities. There have been reports of PBoC working on integrating the CBDC with payment systems in Association of Southeast Asian Nations (ASEAN) states and BRICS members, but not much has come of it.
China’s stablecoin turnaround
The warning by the Chinese regulators comes just as the Asian economic giant was reported to be warming up to stablecoins.
Multiple government agencies have held meetings this year to discuss the role of stablecoins in the $19 trillion economy. While none have openly endorsed these fiat-pegged tokens, local reports have claimed there was wide support for the sector.
For China, stablecoins go beyond just enabling faster, cheaper, and round-the-clock payments. They represent their best opportunity in decades to counter the dominance of the U.S. dollar in global payments.
In June, Zhu Guangyao, a former vice-minister for finance, called on the Chinese government to promote yuan-backed stablecoins in response to the rise of USD alternatives. Currently, over 98% of the stablecoin market is dominated by the greenback.
“We should fully leverage the pilot programmes in Hong Kong. The renminbi stablecoin must be integrated into the overall design of the national financial strategy,” he stated in an event in Beijing.
Experts believed that Hong Kong would be the testing grounds for a yuan stablecoin. The city has traditionally been a testing ground for Mainland China, especially with financial and tech advancements. Digital banks, for instance, first became popular in the city before the Mainland regulators began to cautiously experiment.
Korea’s POSCO adopts JPMorgan’s Kinexys for blockchain cross-border payments
Elsewhere, South Korea’s largest trading company, POSCO International, has joined a growing number of global firms in adopting JPMorgan’s (NASDAQ: JPM) Kinexys blockchain platform for cross-border payments.
POSCO International is a subsidiary of POSCO, South Korea’s largest steel manufacturer. It has operations in over 50 countries and claims to make over 40,000 cross-border payments annually.
The company is aiming to capitalize on Kinexys Digital Payments to make these transfers cheaper, faster, and instant.
Kinexys enables institutional clients to transfer funds instantly over its permissioned blockchain network. Unlike traditional rails, it allows 24/7 cross-border payments in the U.S. dollar, the British pound, and the euro. It claims to have facilitated transfers worth over $1.5 trillion, with a daily average of $2 billion.
Kinexys has racked up dozens of new clients in recent months. This week, Europe’s largest engineering firm, Siemens, adopted the platform for on-chain FX swaps. Last month, one of the largest Middle Eastern banks, the Qatar National Bank, announced a similar integration focused on USD corporate payments.
Watch: Richard Baker on engineering a smarter financial world with blockchain
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Source: https://coingeek.com/china-halts-alibaba-jd-com-stablecoin-plans-in-hk-report/
