The Chinese government has stepped in to slow plans for several tech giants to issue stablecoins in Hong Kong, according to a recent report from the Financial Times, citing sources familiar with the situation.
The tech giants include Ant Group, an affiliate of e-commerce giant Alibaba, and JD.com, among China's largest retailers. Both firms previously urged the People's Bank of China (PBoC) to authorize the launch of yuan-pegged stablecoins in Hong Kong during closed-door meetings, shortly before Hong Kong's new stablecoin licensing regime went into effect.
Yet now, both firms are pausing their stablecoin plans after regulators from the PBoC and from the Cyberspace Administration of China told them not to move ahead, the Financial Times reported Sunday. Five sources told the publication that PBoC officials have concerns over private companies issuing any type of currency, and one source said privately run stablecoins are seen as a potential challenge to China's central bank digital currency, the e-CNY, which has struggled with adoption.
PBoC governor Zhou Xiaochuan flagged concerns over the stability of stablecoins at a closed-door financial forum in late August.
"Central banks currently have at least two concerns. First, excessive money issuance—that is, issuing stablecoins without 100% reserve requirements, a phenomenon known as over-issuance. Second, high leverage—that is, the multiplier effect of monetary derivatives generated by post-issuance operations," a translation of Zhou's statement reads. "Both the US GENIUS Act and Hong Kong's Stablecoin Ordinance have addressed this issue, but control remains significantly insufficient."
Ant Group and JD.com were among 77 firms that expressed interest in applying for a stablecoin license in Hong Kong, the Hong Kong Monetary Authority said in September. Hong Kong authorities have positioned the territory as a space for crypto development, akin to a regulatory sandbox, despite more cautious moves from mainland China.
Chinese regulators have also recently stepped in to slow real-world asset tokenization work in Hong Kong, advising some top brokerages to pause their plans. The regulators also asked major brokers to stop publishing research that endorses stablecoins in August, The Block previously reported.
