Several of China’s largest technology companies, including Ant Group and JD.com, have put their plans to issue their own stablecoins in Hong Kong on hold for the time being.
The move follows a clear intervention by the People’s Bank of China (PBOC) and the Cyberspace Administration of China (CAC), who want to prevent an overly rapid liberalization of the digital financial sector. The companies had originally hoped to issue stablecoins under Hong Kong’s new licensing framework, pegged to fiat currencies such as the Hong Kong dollar or the US dollar. Their goal was to facilitate cross-border payments and, in the long term, promote the international use of the Chinese renminbi.
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Between ambition and oversight
However, Beijing’s regulators apparently saw more risk than potential in these initiatives. According to the Financial Times, the projects were halted on direct orders from Beijing. The main concern was that private companies could gain too much influence over digital currencies, thereby indirectly weakening the central bank’s control over capital flows and monetary policy.
Fears of capital flight, speculation, and loss of monetary sovereignty also played a role. For the affected companies, this represents a significant setback in their efforts to expand their financial services internationally and enter the rapidly growing digital asset sector.
Hong Kong between hope and control
For Hong Kong, which aimed to position itself as a hub for the crypto and Web3 industry through a clear regulatory framework for stablecoins, the decision is a setback. As recently as the summer, several companies had announced their intention to apply for licenses after the city introduced new rules in May for so-called “fiat-referenced stablecoins.” There had been high hopes that Hong Kong - as a special administrative region with greater autonomy - could serve as a bridge between China’s strictly regulated mainland and international crypto markets.
However, the recent intervention from Beijing clearly shows the limits of that autonomy. While cryptocurrency trading remains banned on the mainland, the Chinese government continues to invest in the digital yuan and in its own blockchain infrastructure. Private stablecoins circulating outside the direct control of the central bank are viewed as a potential threat to China’s financial and digital sovereignty. The “right to mint” - meaning the authority to issue digital currencies - is to remain exclusively with the state. Beijing has also slowed down the tokenization initiatives of leading brokers, as cryptovalleyjournal.com reported in September.
