Alibaba deposit token move tests China’s stablecoin crackdown limits

Alibaba’s cross-border arm is exploring an alibaba deposit token to speed up international payments as Beijing tightens control over stablecoins.

What is the alibaba deposit token plan?

Alibaba president Kuo Zhang told CNBC in a Friday report that the company aims to use stablecoin‑like technology to smooth overseas transactions. The cross‑border e‑commerce unit plans to work with banks on tokenized payments, according to a CNBC report. However, the design would differ from privately issued crypto stablecoins.

A deposit token is a blockchain‑based instrument representing a direct claim on commercial bank deposits, treated as a regulated liability of the issuing bank. Moreover, this deposit token explained model mirrors stablecoins in utility, but its issuer is a bank, not a crypto firm. That said, it could enable faster settlement for exporters.

JPMorgan Chase — the world’s biggest bank by market capitalization — reportedly rolled out its deposit token to institutional clients earlier this week. The development underscores rising interest in bank‑issued tokens. However, Alibaba’s approach must align with China’s policy stance.

Why is China saying no to stablecoins?

Chinese technology giants, including Ant Group and JD.com, suspended plans to issue stablecoins in Hong Kong after regulators in Beijing expressed displeasure. The move reflects a wider China stablecoin crackdown that prioritizes control and risk prevention. Moreover, it signals that Chinese tech stablecoins remain a sensitive topic on the mainland.

In July, both Ant Group and JD expressed interest in participating in Hong Kong’s pilot stablecoin program or launching tokenized financial products, such as digital bonds. Similarly, HSBC and the world’s largest bank by total assets — the Industrial and Commercial Bank of China — were reported to share these Hong Kong stablecoin ambitions in early September. However, sentiment shifted quickly afterward.

Later in September, a now‑removed report by Chinese financial outlet Caixin claimed that Chinese firms operating in Hong Kong may be forced to withdraw from cryptocurrency‑related activities. According to the report, policymakers would also restrict mainland companies’ investments in crypto and exchanges. See the detailed Caixin report coverage via this Cointelegraph analysis. That said, authorities continued to stress financial stability.

In early August, Chinese authorities reportedly instructed local firms to cease publishing research and holding seminars related to stablecoins, citing concerns that stablecoins could be exploited for fraud. Moreover, the guidance reinforced a policy line that discourages the emergence of a local stablecoin industry.

Offshore yuan stablecoins: what’s allowed?

In late July, Conflux announced a third version of its public network and introduced a new stablecoin backed by offshore Chinese yuan. Still, the offshore yuan stablecoin targets offshore Chinese entities and Belt and Road participants, not the mainland. For background on the upgrade, see the Conflux 3.0 announcement. However, usage remains focused on cross‑border settings.

In late September, a regulated stablecoin tied to the international version of the Chinese yuan launched. Still, it was intended for foreign exchange markets and debuted at the Belt and Road Summit in Hong Kong, signaling a similar target market. Moreover, these moves show China’s preference for controlled, offshore experimentation.

What comes next for Alibaba and Hong Kong?

A recent analysis suggested that we should not expect Chinese stablecoins to be allowed to circulate in the mainland. Joshua Chu, co‑chair of the Hong Kong Web3 Association, said, “China is unlikely to issue stablecoins onshore.” However, bank‑issued instruments could still support compliant Alibaba blockchain payments for exporters and SMEs operating across borders.

That said, success will depend on bank partners and regulators in Hong Kong and other jurisdictions. Moreover, coordination with JPMorgan Chase and similar institutions could help align any JPMorgan deposit token integrations with local rules. Implementation details will determine timing and scope.

If approved, the alibaba deposit token would streamline cross‑border settlements while fitting China’s stance: no private stablecoins at home, limited experimentation offshore.