"Currency is the Authority of the Central Bank"
Hong Kong Projects Fully Suspended Following Regulatory Orders
China's leading technology giants Alibaba and JD.com have reportedly completely halted their stablecoin issuance projects that were being promoted in Hong Kong. As Chinese financial authorities have effectively put a brake on privately-led digital currency issuance, related plans are now being indefinitely postponed.
China's leading technology giants Alibaba and JD.com have reportedly completely halted their stablecoin issuance projects that were being promoted in Hong Kong (photo provided for article understanding and unrelated to the content). Pixabay
The Financial Times (FT) reported on the 18th (local time), citing multiple anonymous sources, that these companies suspended their preparations for issuance after receiving instructions from regulatory bodies such as the People's Bank of China (PBoC) and the Cyberspace Administration of China (CAC) to "not proceed with any stablecoin-related business for the time being."
As a result, the experiments involving virtual asset-based financial products and stablecoins that Alibaba's financial affiliate Ant Group and JD.com were pursuing in Hong Kong have effectively collapsed. Initially, they had planned to participate in the Hong Kong government's pilot program for stablecoin licensing, but were forced to withdraw due to regulatory risks from mainland China.
Officials from the People's Bank of China told the FT in an interview that "it was deemed inappropriate for private companies to be involved in currency issuance in any form," expressing concerns that it could infringe on the central bank's authority. Another official drew a clear line, stating, "The core issue is whether the issuer of a stablecoin is the state or the market."
Stablecoins are digital assets whose value is pegged to fiat currencies such as the US dollar, and are actively used as a means of transaction and payment in the global cryptocurrency ecosystem. According to the Bank for International Settlements (BIS), more than 99% of currently issued stablecoins are based on the US dollar.
Since 2021, China has completely banned cryptocurrency mining and trading, focusing on blocking financial risks. Strict controls over industries related to crypto assets are still maintained on the mainland.
In contrast, Hong Kong has pursued a strategy to become Asia's virtual asset hub by easing regulations related to digital assets. In August, the Hong Kong Monetary Authority (HKMA) implemented new legislation allowing companies that meet certain requirements to issue and circulate stablecoins, thereby opening up the market.
Accordingly, major technology companies from mainland China appeared to be seeking indirect entry through Hong Kong, but their issuance plans have been derailed by the central government's firm stance.
Meanwhile, opinions within China remain divided. Zhu Guangyao, former Vice Minister of Finance, argued at a forum in June that "the United States is seeking to strengthen dollar hegemony through stablecoins," and insisted that China should actively develop yuan-based stablecoins. He emphasized, "Hong Kong's system should be utilized to the fullest."
However, Zhou Xiaochuan, former Governor of the People's Bank of China, urged caution at a closed-door forum in August of the same year, stating that "stablecoins have strong speculative elements and could act as a destabilizing factor in financial markets." He added, "Improvements in payment system efficiency are limited, and a prior assessment of actual demand is necessary."
The People's Bank of China and the Hong Kong Monetary Authority have not issued official statements on this matter, and Ant Group and JD.com also did not respond to related inquiries, according to the FT.
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