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Chinese tech behemoths, including Ant Group and JD.com, have reportedly halted ambitions to launch stablecoins in Hong Kong after authorities in Beijing raised alarms regarding privately governed digital currencies.
The firms were directed by the People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) to suspend these projects, the Financial Times reported on Sunday, referencing sources acquainted with the situation.
“The genuine regulatory concern is, who possesses the ultimate authority of minting — the central bank or any private entities in the marketplace?” one source familiar with the discussions told the FT.
Both firms had shown interest earlier this year in participating in Hong Kong’s pilot stablecoin initiative or in introducing tokenized financial products such as digital bonds.
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Hong Kong’s stablecoin initiative encounters a hurdle
Hong Kong commenced receiving applications from stablecoin issuers in August. Officials from the mainland initially perceived the program as a means to foster renminbi-pegged stablecoins and enhance the yuan’s global presence.
Nevertheless, the momentum swiftly diminished as Ye Zhiheng, executive director of the intermediaries division at the Hong Kong Securities and Futures Commission (SFC), cautioned that the city’s novel stablecoin regulatory structure has amplified the risk of fraud.
Ye’s comments came after stablecoin firms operating in Hong Kong registered double-digit declines on Aug. 1, just following the implementation of the new stablecoin regulation.
Last month, the Chinese financial publication Caixin indicated that Beijing had limited Hong Kong’s stablecoin operations. However, the report was taken down shortly after its release, raising questions about its validity.
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China reverses stance on Hong Kong tokenization drive
Last month, China’s securities regulator also reportedly ordered several local brokerages to halt their real-world asset (RWA) tokenization efforts in Hong Kong, signifying Beijing’s increasing discomfort with the rapid growth of offshore digital asset endeavors.
This action occurred as tokenization is gaining traction in the nation. Last week, CMB International Asset Management (CMBI), a Hong Kong-based subsidiary of a prominent Chinese commercial bank, China Merchants Bank (CMB), tokenized its $3.8 billion money market fund (MMF) on BNB Chain.
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