China’s Stance on Digital Currencies
China’s approach to digital currencies remains stringent, emphasizing rigorous oversight of cryptocurrencies and stablecoins as neighboring Asian nations move towards establishing regulated systems. On Monday, during a conference held in Beijing, Pan Gongsheng, the Governor of the People’s Bank of China (PBOC), reaffirmed the central bank’s commitment to restricting domestic cryptocurrency activities and speculation. He stressed that existing policies aimed at mitigating risks associated with cryptocurrencies continue to be effective.
Concerns Over Stablecoins
Pan highlighted his concerns specifically regarding stablecoins, which he claimed fail to comply with essential regulations such as customer identification and anti-money laundering protocols. He warned that these digital currencies could exacerbate risks within the global financial system and threaten the monetary sovereignty of less developed nations. The central bank intends to collaborate with law enforcement agencies to combat illegal crypto-related practices within China, focusing on reinforcing the stability of the economy and financial sector.
Monitoring International Developments
The PBOC is also monitoring the evolving landscape of stablecoins in international markets closely. Pan’s comments coincided with the launch of JPYC, a yen-backed stablecoin by a Japanese startup, which aims to roll out approximately $66 billion worth of tokens over the next three years. Previously, South Korea had introduced its first fully regulated won-backed stablecoin, KRW1, through partnerships involving Woori Bank and digital custodian BDACS on the Avalanche blockchain.
Reports recently surfaced suggesting that the Bank of China’s shares in Hong Kong experienced a surge following indications that the institution might apply for a stablecoin license. Standard Chartered has also shown interest in this arena. Meanwhile, projections from users on the Myriad platform indicate a positive outlook for the stablecoin market, estimating its capitalization could exceed $360 billion by February. (It is important to note that Myriad is a product of DASTAN, which is affiliated with Decrypt.)
Chinese Businesses and International Initiatives
Chinese businesses are venturing into international stablecoin initiatives, with Jack Ma’s Ant Group applying for the trademark “ANTCOIN” in Hong Kong to encompass stablecoin issuance, along with transfers. JD.com, another major player, is eyeing overseas licenses to leverage stablecoins for cross-border business payments, with plans to extend this to consumer transactions.
Global Implications of China’s Regulatory Activities
Ray Youssef, the CEO of the crypto application NoOnes, remarked on how China’s regulatory activities are influencing global stablecoin governance amidst a relatively stable financial environment, devoid of sanctions. He noted that China’s cautious stance on these digital assets mirrors the European Union’s approach but suggests that it could pivot towards a more lenient position in the future, akin to Russia, where stablecoins are increasingly utilized for facilitating international transactions.
Additionally, Youssef acknowledged that the regulatory changes being implemented should not diminish Hong Kong’s status as a key global financial hub, given that Beijing has long relied on the region as an economic testing ground, which ultimately supports the mainland economy.
