Companies such as JD.com and Ant Group had been planning to take part in Hong Kong’s pilot stablecoin project or issue virtual asset-backed products, like tokenized bonds.
But as the Financial Times (FT) reported Saturday (Oct. 18), sources say that regulators such as the People’s Bank of China (PBoC) and Cyberspace Administration of China (CAC) have asked these firms not to proceed with their plans.
According to five of those sources, officials at the central bank cautioned against taking part in the initial stablecoin rollout due to concerns about allowing tech groups and brokerages to issue any sort of currency.
Another source with knowledge of the PBoC’s instructions to the tech companies said the issuance of privately run stablecoins was also viewed as a challenge to the bank’s digital currency project, the e-CNY.
“The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?” said a different person.
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As the FT noted, this pushback spotlights the way the world’s regulators are eager to slow the rise of stablecoins, digital assets pegged to currencies like the U.S. dollar. This is especially true with the U.S. administration promoting the coins as a major part of mainstream finance and a way to project the U.S. dollar’s dominance.
The European Central Bank has said widespread adoption of dollar stablecoins could hold back its ability to oversee monetary policy.
In other stablecoin news, PYMNTS wrote last week about the pragmatic lesson for corporate teams weighing digital assets: “Stability isn’t a label; it’s a function of design, disclosure and market depth.”
Even if a stablecoin is “mechanically sound,” that report said, it still needs to be sufficiently liquid and widespread to cover large transfers and settlement needs.
The “deep order books and broad network connectivity” of coins like those from Circle and Tether offer a scale advantage: They can transmit tens or hundreds of millions across exchanges or chains without large slippage, that report added.
“Moving $10 [million] to $30 million across borders into exotic corridors typically takes three to five business days,” Stable Sea CEO Tanner Taddeo said in an interview with PYMNTS in July. “With stablecoins, it can settle in four to eight hours.”
“Every business has a stablecoin use case,” Taddeo added. “Whether it’s internal payroll, contractor payments or capital markets access. Form a tactical SWAT team to identify the right pilot.”
