China Blocks Alibaba’s Stablecoin Plans in Hong Kong

Ant Group and JD․com halted yuan-pegged stablecoin development, reports Financial Times.

Ant Group, a subsidiary of Alibaba, and JD․com have halted the development of stablecoins pegged to the yuan. This was reported by the Financial Times, citing informed sources.

In anticipation of new stablecoin legislation in Hong Kong, the tech giants held closed-door meetings with the People’s Bank of China (PBOC) and the Cyberspace Administration of China. Ant Group and JD․com sought permission to launch these assets.

However, regulators issued clear instructions not to proceed in this direction. According to the publication’s sources, the Chinese central bank opposes granting companies and brokers the right to issue any form of currency.

The PBOC views private stablecoins as a threat to the digital yuan, which has yet to gain widespread adoption.

A Shift in Stance

Regulations for the sector came into effect on August 1. The Hong Kong Monetary Authority received over 70 applications from issuers of fiat-pegged assets. Some officials suggested that issuing yuan stablecoins would aid in the internationalization of the Chinese currency.

One of Beijing’s goals was also to counter the dominance of the US dollar. According to SWIFT’s RMB Tracker, as of August, the yuan was the sixth most active currency in global payments, with a share of 2.9%. The US national currency accounted for nearly 47%.

However, sources indicate that after a speech by former PBOC Chairman Zhou Xiaochuan at the end of August, regulators adopted a more cautious stance. At a closed forum in Beijing, Zhou stated:

“Vigilance is needed regarding the risks of using stablecoins for speculation, as this could trigger fraud and instability in the financial system.”

Back in September, The Economist suggested the potential failure of yuan-pegged stablecoins. Experts highlighted limited offshore asset supply and strict capital movement controls as reasons.