Chinese Tech Giants Suspend Stablecoin Initiatives in Hong Kong Following Regulatory Concerns
Ant Group and JD.com have halted their efforts to develop stablecoins in Hong Kong due to worries raised by Beijing authorities regarding private digital currency issuance.
Chinese technology leaders, notably Ant Group and JD.com, have decided to pause their plans related to stablecoin issuance in Hong Kong following objections from regulatory bodies in Beijing about the issuance of private digital currencies.
The People’s Bank of China (PBoC) along with the Cyberspace Administration of China (CAC) intervened, prompting the companies to halt these projects, according to a report by the Financial Times.
“The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?” one insider informed the FT.
“La verdadera preocupación regulatoria es, ¿quién tiene el derecho último de emisión monetaria: el banco central o cualquier empresa privada en el mercado?”
Both firms previously indicated their interest in participating in Hong Kong’s pilot program for stablecoins or in launching tokenized financial instruments such as digital bonds earlier this year.
Hong Kong’s Stablecoin Ambitions Face Challenges
Hong Kong has been accepting applications for stablecoin issuers since August, believing it to be a chance to increase the international usage of renminbi-linked stablecoins. However, the initiative has encountered setbacks as Ye Zhiheng of the Hong Kong Securities and Futures Commission (SFC) cautioned that the new regulatory framework may lead to increased fraud risk.
People’s Bank of China Headquarters, Beijing. Source: Wikimedia
Ye’s warnings came amidst reports of significant financial losses from stablecoin companies in Hong Kong shortly after new regulations were implemented. Recently, Chinese financial news source Caixin noted that Beijing has curtailed Hong Kong’s stablecoin operations, although this report was removed shortly after release, causing skepticism regarding its accuracy.
China’s U-turn on Mere Tokenization
Additionally, China’s securities regulators previously asked local brokerages to stall their tokenization endeavors in Hong Kong, reflecting growing concern from Beijing regarding the fast expansion of offshore digital asset initiatives. This directive came as tokenization activities have been flourishing in the region, illustrated by the recent $3.8 billion tokenization of a money market fund by China Merchants Bank’s Hong Kong-based subsidiary.
