Beijing stops Ant Group and JD.com: Concerns about stablecoins in Hong Kong!

Beijing stops Ant Group and JD.com: Concerns about stablecoins in Hong Kong!

Ant Group and JD.com, two major players in the Chinese tech industry, have temporarily suspended their plans to issue stablecoins in Hong Kong. This decision follows concerns raised by the People’s Bank of China (PBoC) over control and sovereignty over privately issued currencies.

How Crypto News reports, both companies had originally announced participation in the stablecoin pilot program that launched in Hong Kong this summer. However, the PBoC and the Cyberspace Administration of China have issued strict guidelines and recommendations against participating in this initiative.

Regulatory concerns and warnings

Chinese regulators' concerns were particularly triggered by a warning from former PBoC governor Zhou Xiaochuan. He warned against excessive use of stablecoins for speculation, which could lead to fraud and financial instability. Zhou called for a careful assessment of the actual demand for tokenization.

Additionally, PBoC officials expressed that private companies should not have the “ultimate right to mint coins.” These comments reflect widespread distrust of privately controlled currencies, particularly in a country that has traditionally favored state-controlled monetary systems.

Strategic considerations

Previous thinking by some Chinese officials suggested that renminbi-denominated stablecoins could be seen as a strategic measure against the dominance of the US dollar. In June, former Vice Finance Minister Zhu Guangyao said China should take advantage of Hong Kong's pilot programs to develop a renminbi-based stablecoin. This shows interest in strengthening the international use of the yuan.

The Hong Kong Monetary Authority's pilot program, which accepted applications from stablecoin issuers in August, could be seen as a testing ground for such innovations. Despite the initial interest in this program and the possibility of promoting the use of the yuan in the international space, recent developments have shown that China's authorities are cautious when it comes to the regulation and use of stablecoins.

The current situation makes it clear that the efforts towards stablecoins are accompanied by regulatory tensions not only locally, but also globally. Skepticism about privately controlled currencies is likely to continue to shape the digital currency discussion and could have implications for future developments in this fast-moving financial landscape.