Chinese technology companies have halted their plans to launch stablecoins in Hong Kong following heightened regulatory scrutiny from Beijing. This move comes amid growing concerns about the proliferation of currencies managed by the private sector, which could challenge state-run monetary systems.
Prominent firms, such as Ant Group, backed by Alibaba, and the e-commerce giant JD.com, had expressed intentions over the summer to engage with Hong Kong’s pilot stablecoin initiative or to develop asset-backed virtual products, including tokenized bonds. However, according to multiple sources close to the matter, these ambitions have been shelved after directions from key Chinese regulators, including the People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC), advised against progressing with these initiatives.
Officials from the PBoC specifically raised concerns regarding the implications of allowing tech firms and brokerages to issue their own currencies. A source familiar with the central bank’s discussions remarked that the launch of privately-operated stablecoins poses a potential threat to the PBoC’s own digital currency project, the e-CNY. “The real regulatory concern is who retains the ultimate authority over currency creation—the central bank or private enterprises,” another informed individual noted.
Stablecoins, digital tokens typically pegged to fiat currencies such as the US dollar, play a crucial role in the cryptocurrency trading ecosystem. This regulatory pushback by Chinese authorities mirrors global trends, as governments worldwide seek to manage the rise of stablecoins—especially in light of their endorsement during the Trump administration as crucial for mainstream finance and a tool to bolster the US dollar’s global dominance. Central banks, including the European Central Bank, have raised alarms that widespread adoption of dollar stablecoins could undermine their ability to influence monetary policy.
In August, the Hong Kong Monetary Authority (HKMA), acting as the territory’s de facto central banking authority, began accepting applications from prospective stablecoin issuers, thus positioning Hong Kong as a potential testing ground for mainland China. Enthusiasm for the Hong Kong stablecoin program had surged over the summer, with some officials contemplating whether renminbi-denominated stablecoins could enhance the international standing of the yuan.
Zhu Guangyao, a former vice-minister of finance in China, underscored the strategic importance of developing a stablecoin tied to the renminbi during a forum in Beijing earlier in June. He argued that in light of the U.S. push for stablecoins, China must respond proactively by leveraging the pilot programs in Hong Kong as part of a broader national financial strategy.
However, following a cautionary address by former PBoC governor Zhou Xiaochuan in late August, regulators have adopted a more guarded stance. At a confidential financial forum in Beijing, Zhou called for a comprehensive evaluation of stablecoins and the systemic risks they present. He stated, “We need to be vigilant against the risk of stablecoins being excessively used for asset speculation, as such misdirection could lead to fraud and instability within the financial system.” Zhou emphasized that while many see stablecoins as transformative for payment systems, the current infrastructure has limited potential for cost reductions, particularly in retail transactions.
Both the PBoC and HKMA have refrained from commenting on the developments, and officials from CAC, Ant Group, and JD.com have not responded to inquiries seeking clarification on the matter.
