Beijing’s recent moves to rein in mainland Chinese firms’ stablecoin and tokenisation initiatives in Hong Kong may have rattled the city’s crypto sector, but the Chinese government’s increased openness to digital assets overall had not changed amid competition with the US, experts said.
The People’s Bank of China (PBOC) recently summoned a number of mainland firms under its jurisdiction, asking them to wait for its instructions before moving forward with their stablecoin initiatives in Hong Kong, according to a person familiar with the matter who declined to be named due to its sensitivity.
The targeted firms included banks and non-bank payment service providers, the person said.
The Chinese central bank and the Cyberspace Administration of China have asked Ant Group and JD.com “not to move ahead” with their stablecoin projects, the Financial Times reported last week.
Ant Group and JD.com did not respond to requests for comment. Ant Group is an affiliate of Alibaba Group Holding, owner of the Post.
The directive reflects Chinese regulators’ attempts to cool down months of fervour surrounding stablecoins and real-world asset (RWA) tokenisation in Hong Kong, which has been allowed to develop its digital asset sector since 2022.
Police stand guard in front of the headquarters of the People’s Bank of China in Beijing, September 30, 2022. Photo: Reuters alt=Police stand guard in front of the headquarters of the People’s Bank of China in Beijing, September 30, 2022. Photo: Reuters>
China’s securities watchdog also reportedly advised mainland brokerages recently to pause RWA projects in Hong Kong over concerns about overheating in the market.
However, such guidance appears to be directed at mainland-incorporated firms engaging in such activities offshore, and “should not be read as a blanket rejection of Hong Kong’s digital asset agenda”, said Joy Lam, founder of Clarient Advisory, a Hong Kong-based firm focused on digital asset strategies.
Still, many firms that previously promoted their tokenisation initiatives in Hong Kong are becoming more cautious and have adopted a lower profile.
CMB International Asset Management, a subsidiary of China Merchants Bank, deleted a statement it published on WeChat last week announcing a tokenised USD Money Market Fund in partnership with BNB Chain, the blockchain developed by cryptocurrency exchange Binance.
While Beijing’s moves have dampened the confidence of some participants in Hong Kong’s digital asset sector, China still recognised the major role crypto could play in its competition with the US, according to Yifan He, founder and CEO of Hong Kong-based Red Date Technology, which operates a payment infrastructure for regulated digital currencies.
