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The United States, under Trump’s administration, ended its negative stance towards cryptocurrencies, creating pathways to explore innovation in this field. On the other hand, while China under President Biden appeared to legitimize access to crypto via Hong Kong, recent actions have stymied the advancement of steps framed as the “future of payment services,” forcing companies to retract.
China and Cryptocurrencies
Ant Group and JD publicly declared their ambition to issue stablecoins, inspired by tangible moves from giants like PayPal. Global payment service leaders have successfully begun integrating their systems with stablecoins. PayPal’s stablecoin, PYUSD, has reached a circulation supply exceeding $2.7 billion already, with the total market value of all stablecoins nearing $317 billion. Experts anticipate crossing the trillion-dollar threshold soon.
For financial tech companies, adapting to this innovation is critical for staying competitive. For Chinese corporations, this transition isn’t as straightforward, as the People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) recently discouraged companies from launching stablecoins.
Despite the restrictions, China-based corporations were making concrete strides in both stablecoins and tokenization initiatives.
Hong Kong and Crypto
In August, Hong Kong began accepting applications for stablecoin issuers. While mainland China maintains a restrictive approach towards cryptocurrencies, differentiating between mainland policies and those of the autonomous region of Hong Kong, many activities allowed in Hong Kong remain prohibited in the mainland. At that time, it was viewed as a window for the yuan to enhance its global foothold.
Subsequently, the Hong Kong Securities and Futures Commission’s intermediary director Ye Zhiheng, purportedly under central instructions, claimed that stablecoin regulatory frameworks could heighten fraud risks, thereby stalling issuers and slowing the progress.
Last month, Caixin, a Chinese financial institution, published a report indicating Beijing had limited Hong Kong’s stablecoin activities, which was promptly retracted mysteriously. It is clear that mainland China continues its cautious stance towards crypto, and when aligned with Trump’s progressive actions in the realm, it appears the financial future might be forged in the West.
Recently, the Chinese Securities Regulatory Commission suspended the operations of Hong Kong-based Real World Asset companies. Intriguingly, amidst this upheaval, China Merchants Bank’s (CMB) subsidiary in Hong Kong, CMB International Asset Management (CMBI), tokenized a $3.8 billion money market fund on the BNB Chain.
