Chinese Tech Giants Halt Stablecoin Plans in Hong Kong Amid Regulatory Concerns
Chinese tech giants, including Ant Group and JD.com, have reportedly suspended their plans to issue stablecoins in Hong Kong after regulators in Beijing raised concerns about privately controlled digital currencies. The companies have been ordered by the People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) to stop these initiatives, according to sources familiar with the matter.
The regulatory concern revolves around the ultimate right to mint digital currencies, with a source familiar with the discussions stating, “The real regulatory concern is who has the ultimate right to mint – the central bank or some private company in the market?” This concern highlights the ongoing debate about the role of private companies in the issuance of digital currencies and the potential risks associated with them.
Hong Kong’s Stablecoin Push Faces Challenges
Hong Kong began accepting applications for stablecoin issuers in August, with mainland officials initially viewing the program as an opportunity to promote renminbi-pegged stablecoins and expand the yuan’s international presence. However, the momentum soon faded as Ye Zhiheng, executive director of the Hong Kong Securities and Futures Commission (SFC)’s intermediary department, warned that the city’s new stablecoin regulatory framework had increased the risk of fraud.
Stablecoin companies operating in Hong Kong recorded double-digit losses on August 1, shortly after the new stablecoin regulation came into effect. This has led to a reevaluation of the program, with Beijing restricting stablecoin activities in Hong Kong, according to a report by Chinese financial media Caixin, which was later removed.
Tokenization Efforts in Hong Kong Also Affected
China’s securities regulator has also ordered several local brokerage firms to pause their real-world asset tokenization (RWA) activities in Hong Kong, indicating Beijing’s growing unease over the rapid expansion of offshore digital asset operations. However, tokenization continues to gain momentum in the country, with CMB International Asset Management (CMBI), a Hong Kong-based subsidiary of China Merchants Bank (CMB), recently tokenizing its $3.8 billion money market fund (MMF) on BNB Chain.
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