Chinese Tech Giants Pause Hong Kong Stablecoin Initiatives Due to Beijing’s Worries

Chinese tech behemoths like Ant Group and JD.com have allegedly put their plans to launch stablecoins in Hong Kong on hold following concerns raised by regulators in Beijing regarding privately controlled digital currencies.

The People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) directed these companies to halt their efforts, according to a Financial Times report from Sunday, citing informed sources.

“The main regulatory issue is, who holds the ultimate authority of coinage — the central bank or private enterprises?” a source familiar with the discussions informed the FT.

Earlier this year, both companies had shown interest in participating in Hong Kong’s pilot stablecoin program or launching tokenized financial products like digital bonds.

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Hong Kong’s stablecoin initiative faces challenges

In August, Hong Kong commenced accepting applications from stablecoin issuers. Initially, mainland officials viewed this program as a way to promote renminbi-pegged stablecoins and enhance the yuan’s global presence.

However, progress has since stalled as Ye Zhiheng, executive director of the intermediaries division at the Hong Kong Securities and Futures Commission (SFC), cautioned that the city’s new stablecoin regulatory framework has increased the potential for fraud.

Ye’s comments came after stablecoin firms in Hong Kong reported double-digit losses on August 1, shortly after the new regulations took effect.

Last month, the Chinese financial media outlet Caixin reported that Beijing had imposed restrictions on Hong Kong’s stablecoin operations. However, this report was swiftly taken down, raising questions about its accuracy.

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