Chinese tech giants like Ant Group and JD.com have reportedly put their plans to launch stablecoins in Hong Kong on hold after concerns were raised by regulators in Beijing regarding privately controlled digital currencies.
The People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) instructed the companies to pause these initiatives, as reported by the Financial Times on Sunday, citing sources with knowledge of the situation.
“The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?” one source familiar with the discussions told 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 obstacles
Hong Kong began accepting applications for stablecoin issuers in August. Initially, mainland officials viewed the program as a chance to promote renminbi-pegged stablecoins and broaden the yuan’s international presence.
However, the momentum eventually slowed as Ye Zhiheng, executive director of the intermediaries division at the Hong Kong Securities and Futures Commission (SFC), cautioned that the new stablecoin regulatory framework has increased the risk of fraud.
Ye’s comments came after stablecoin companies operating in Hong Kong reported double-digit losses on August 1, right after the new stablecoin regulations took effect.
Last month, the Chinese financial outlet Caixin reported that Beijing had restricted stablecoin activities in Hong Kong; however, the report was taken down shortly after it was published, raising questions about its accuracy.
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China reverses on Hong Kong tokenization efforts
Last month, China’s securities regulator also reportedly instructed several local brokerages to halt their real-world asset (RWA) tokenization activities in Hong Kong, indicating Beijing’s rising concerns over the rapid surge of offshore digital asset ventures.
This move coincided with an increase in tokenization activities within the country. Last week, CMB International Asset Management (CMBI), a Hong Kong-based arm of a major Chinese bank, China Merchants Bank (CMB), tokenized its $3.8 billion money market fund (MMF) on BNB Chain.
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