As Beijing raises concerns about the rise of privately controlled currencies, Chinese tech giants — Alibaba-backed Ant Group and e-commerce firm JD.com — are pausing plans to issue stablecoins in Hong Kong.

According to the Financial Times, the companies had announced over the summer that they would participate in Hong Kong’s pilot stablecoin program. But now Chinese regulators, including the People’s Bank of China and the Cyberspace Administration of China, have advised against participation in the initial stablecoin rollout.

PBoC officials expressed concerns about allowing tech groups and brokerages to issue any currency.

The central bank reportedly expressed concern about whether private companies should have “the ultimate right of coinage,”

This caution contrasts with the earlier enthusiasm of some Chinese officials, who viewed renminbi-denominated stablecoins as a strategic response to U.S. dollar dominance.

In June, former Vice Minister of Finance Zhu Guangyao stated that the United States promotes stablecoins to maintain the dollar’s global dominance.

He also suggested that China utilize Hong Kong’s pilot programs and emphasized that a renminbi-based stablecoin should be incorporated into the country’s national financial strategy.

Interest in the Hong Kong program had surged over the summer. Officials also suggested that renminbi stablecoins could boost the yuan’s international use.

Risk assessment outweighs payment innovation benefits

Former PBoC Governor Zhou Xiaochuan has warned about the need for vigilance against stablecoins being excessively used for asset speculation, noting that misdirection could lead to fraud and financial system instability.

He called for careful assessment of tokenization’s actual demand as

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Author: Vignesh Karunanidhi