Ant Group and JD.com Halt Stablecoin Initiatives in Hong Kong Following Orders From Beijing Regul...

Ant Group and JD.com stopped stablecoin plans in Hong Kong due to pressure from Chinese mainland regulators.

Beijing wants full control over currency issuance and does not support private firms issuing stablecoins.

Hong Kong’s new stablecoin rules caused fraud concerns and led to caution among digital finance companies.

Ant Group and JD.com have paused their stablecoin initiatives in Hong Kong after receiving instructions from Chinese regulators. The People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) instructed the businesses to halt their digital currency initiatives. These advancements indicate an increase in regulatory anxieties regarding privately issued stablecoins

Beijing’s concern centers on control over monetary issuance. Authorities want to ensure that only the central bank has that authority. This move comes despite earlier interest from Ant Group and JD.com to join Hong Kong’s pilot program for stablecoins.

The pilot aimed to develop tokenized financial products, including digital bonds. However, pressure from mainland regulators has since slowed the momentum.

Hong Kong’s Stablecoin Framework Adds Complexity

Hong Kong introduced a new regulatory framework for stablecoins in May. The law requires issuers of fiat-referenced stablecoins to obtain licenses from the Hong Kong Monetary Authority (HKMA). This applies to stablecoins backed by Hong Kong dollars, whether issued locally or abroad.

Ant Group announced plans in June to participate in the pilot program. JD.com also expressed similar intentions earlier this year. However, after the Chinese regulators issued the mandate, both companies have suspended these plans.

The HKMA refused to make any comment on the current turn of events. However, the regulatory environment remains uncertain as companies evaluate the risks of moving forward.

Warnings and Market Reactions

The issue with the risks of fraud arose when Hong Kong presented the new framework. A senior officer in the Hong Kong Securities and Futures Commission warned about the possibility of greater fraud under the new regulations. These remarks came after several stablecoin firms reported losses shortly after the regulation took effect in August.

In the meantime, Caixin, a Chinese finance-related publication, claimed that the capital had prohibited the activity of stablecoins in Hong Kong. The report was subsequently taken down, but it contributed to speculation about the standpoint of Beijing.

Simultaneously, the securities regulator of China allegedly told brokerages to halt the real-world asset tokenization in Hong Kong. These indicators are an indication that Chinese regulators are being risk-averse in relation to offshore digital asset developments.

Tokenization Developments Continue Amid Pause

Despite the regulatory pushback, tokenization activities in Hong Kong have not fully stopped. Hong Kong-based CMB International Asset Management, a division of China Merchants Bank, recently tokenized its money market fund of 3.8 billion on the BNB Chain. Moreover, HSBC launched Hong Kong’s first blockchain payment service using tokenized deposits for faster transactions.

Nevertheless, the halt of Ant Group and JD.com represents a change in the interaction of Chinese tech companies in relation to digital finance initiatives in the non-mainland sphere. The suspension highlights how the mainland regulators have contributed to the digital currency initiatives in Hong Kong. Earlier this year, JD.com and Ant Group sought approval to launch a stablecoin backed by offshore yuan in Hong Kong.