Chinese technology giants, including Alibaba-backed Ant Group and e-commerce titan JD.com, have reportedly paused their stablecoin projects in Hong Kong following regulatory concerns voiced by Beijing. The decision follows instructions from Chinese authorities, including the People's Bank of China (PBoC) and the Cyberspace Administration of China (CAC), to suspend their digital currency initiatives.
This move comes as China increases its control over private sector involvement in the financial system, particularly concerning digital currencies. Regulators are reportedly uneasy about the increasing influence of privately issued stablecoins, viewing them as potential threats to the country's monetary sovereignty and financial stability. Stablecoins, which are digital tokens pegged to fiat currencies like the U.S. dollar, have been gaining popularity as a bridge between traditional finance and the crypto economy.
Hong Kong's government had previously signaled openness to becoming a digital asset hub, introducing licensing frameworks for crypto firms and exploring stablecoin regulations. However, Beijing's intervention seems to have dampened enthusiasm among major Chinese firms that were considering opportunities in the region's evolving crypto landscape.
Sources familiar with the matter indicated that PBoC representatives discouraged participation in Hong Kong's pilot stablecoin program, citing risks associated with allowing private enterprises to create or manage currency-like assets. One source stated that Beijing views privately issued stablecoins as a potential threat to the central bank's own digital yuan (e-CNY) project. Another source summarized the key concern: "The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?".
Former PBoC governor Zhou Xiaochuan had called for restraint, cautioning against the risk of stablecoins being excessively used for asset speculation, which could trigger fraud and instability in the financial system. He also emphasized the need for a careful assessment of the true demand of tokenization as a technological foundation.
This development highlights the delicate balance between innovation and regulation in China's approach to blockchain technology and digital finance. It also marks a significant moment in Asia's digital currency landscape, potentially reshaping Hong Kong's ambitions to position itself as a regional leader in the cryptocurrency and stablecoin sectors. While Reuters has yet to independently confirm the Financial Times report, the suspension of these projects underscores China's continued efforts to maintain strict control over financial innovation and prevent the rise of alternative currencies outside its oversight.
