- Ant Group and JD.com must stop issuing stablecoins in Hong Kong following instructions from the Chinese government.
- Chinese officials view privately run stablecoins as a risk to the e-CNY, its central bank digital currency, which has struggled with broad adoption.
- Officials are concerned that stablecoin “over-issuance” without full reserve backing and “leverage amplification” could threaten the country’s financial stability.
Chinese tech and financial companies Ant Group and JD.com are now obligated to halt the issuance of stablecoins in Hong Kong following instructions from the People’s Bank of China (PBoC) and the Cyberspace Administration of China.
Both Ant Group and JD.com partnered to explore and participate in Hong Kong’s stablecoin program. Both companies were also working on the tokenisation of financial products, like digital bonds.
One source told FT: “Who has the ultimate right of coinage — the central bank or any private companies on the market?”
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Privately-Run Stablecoins Are a ‘Risk’ For China’s CBDC
In prior closed-door meetings, they urged the PBoC to authorise yuan-pegged stablecoins in Hong Kong ahead of the territory’s new licensing rules, according to a report from the Financial Times on Sunday, citing people familiar with the discussions.
But officials basically view privately run stablecoins as a potential challenge to the e-CNY, China’s central bank digital currency (CBDC), which has struggled to gain broad adoption. One of those officials is the PBoC governor, Zhou Xiaochuan, who claimed stablecoins are a security risk for the financial system.
Central banks currently have at least two key concerns. First is “over-issuance”, meaning the issuer releases stablecoins without a true 100% reserve backing, effectively expanding the money supply. Second is “leverage amplification”, where the circulation of stablecoins after issuance creates a multiplier expansion of derived money. The U.S. GENIUS Act and Hong Kong’s Stablecoin Ordinance have noted these risks, though control remains insufficient.
Zhou Xiaochuan, PBoC governor.In August, Mainland regulators also asked major brokerages to stop publishing research that endorses stablecoins, and in recent weeks advised leading firms in Hong Kong to slow real-world asset tokenisation initiatives.
Starting this year, the Chinese government tightened its grip on the local cryptocurrency industry. In January, China’s State Administration of Foreign Exchange presented new laws for banks forcing them to monitor and report suspicious international transactions, including crypto.
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