Chinese authorities told local firms to stop publishing research or holding seminars related to stablecoins, according to a Friday report from Bloomberg.
Chinese financial regulators reportedly instructed local brokers and other entities to cancel seminars and halt the promotion of research on stablecoins. Citing people familiar with the matter, Bloomberg said the authorities were concerned that stablecoins could be exploited as a tool for fraudulent activities.
Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp. in Singapore, said Beijing may be aiming to prevent a speculative surge among retail investors.
“There’s still a worry that not everyone knows adequately about crypto and policymakers, being pragmatic, don’t want herd mentality when investors buy into something that they do not know what the risks are” he said.
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China takes hold of its financial ecosystem
The move follows a series of regulatory steps aimed at tightening control over digital assets, including rules requiring the country’s banks to monitor and flag risky trades involving crypto assets. Monitored activities include cross-border gambling, underground banks and illegal cross-border financial activities involving crypto.
Still, while China imposes strict rules on its mainland territory, it appears to be leveraging stablecoins where it suits its objectives. Hong Kong is often viewed as China’s regulatory sandbox, and it has recently implemented a new stablecoin issuance framework with a six-month transition period accompanied by special rules.
The Hong Kong subsidiary of major bank Standard Chartered will partner with Web3 software company Animoca Brands to develop a Hong Kong-dollar stablecoin through a joint venture announced on Friday. Standard Chartered’s involvement is particularly notable. The bank is one of three entities — alongside HSBC and Bank of China (Hong Kong) — authorized to issue physical Hong Kong dollars under the Hong Kong Monetary Authority’s oversight.
Also, in late July, Chinese e-commerce behemoth JD.com registered entities tied to a potential stablecoin rollout in Hong Kong. The same month, Ant International, a Singapore-based unit of the Jack Ma-backed Ant Group, reportedly planned to apply for stablecoin issuer licenses in Singapore and Hong Kong. Jingdong Coinlink Technology Hong Kong, a subsidiary of JD Technology Group, also announced plans to issue a Hong Kong dollar stablecoin in summer 2024.
Related: Hong Kong stablecoin stocks slide as new rules take effect, experts see healthy reset
Yuan stablecoins allowed, but not in China
There are also yuan-based examples, but those are expected to be used exclusively outside mainland China’s borders.
According to reports from late July, Chinese blockchain Conflux announced a third version of its public network and introduced a new stablecoin backed by offshore Chinese yuan. That news followed AnchorX receiving in-principle approval for its yuan-pegged stablecoin, AxCNH, from Kazakhstan’s regulator, the Astana Financial Services Authority, in late February.
While this stablecoin is based on mainland China’s fiat currency, it aims to serve only offshore Chinese entities and countries involved in China’s Belt and Road Initiative. The Belt and Road Initiative is a Chinese global infrastructure and economic strategy aiming to connect Asia, Africa and Europe through land and maritime trade routes.
Despite its domestic restrictions, China appears to be selectively enabling the global expansion of its digital currency influence, just not within its own borders.
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