JD.com Ant Group Push Yuan Backed Stablecoins in Hong Kong

Chinese tech giants JD.com and Ant Group are actively advocating for the approval of yuan-backed stablecoins in Hong Kong. These stablecoins, pegged to the offshore yuan, are intended to bolster the global use of the Chinese currency. The companies have engaged in private discussions with the People’s Bank of China (PBOC), emphasizing that yuan-based stablecoins issued offshore could significantly enhance the international adoption of the yuan, especially as dollar-backed stablecoins gain traction in global trade and remittances.

Both JD.com and Ant Group are preparing to issue stablecoins backed by the Hong Kong dollar under the city’s new licensing regime, which is set to commence on August 1. However, their ultimate goal is to secure approval for yuan-pegged stablecoins in Hong Kong. This strategic move aims to challenge the dominance of the US dollar in digital finance. JD.com has argued that using the Hong Kong dollar for such stablecoins is ineffective due to its peg to the US dollar, and has proposed a phased rollout starting in Hong Kong and expanding to China’s free trade zones.

This push for yuan-backed stablecoins comes as Beijing gradually shifts its stance on cryptocurrencies. While mainland China maintains a ban on crypto trading and mining, the official tone has softened, particularly under the Trump administration in Washington, where support for stablecoins has increased. The push for yuan-denominated stablecoins also aligns with the views of China’s financial establishment, with calls for more efficient yuan payments to keep pace with dollar stablecoins.

Hong Kong, already a major offshore yuan hub, is set to play a pivotal role in this initiative. The region’s new stablecoin licensing framework, which comes into effect on August 1, positions it at the forefront of the global competition over digital asset regulation. Ant Group is preparing to apply for stablecoin licenses in Hong Kong and Singapore, while JD.com founder Richard Liu has expressed plans for similar licenses globally.

PBOC Governor Pan Gongsheng acknowledged last month that stablecoins and central bank digital currencies (CBDCs) are transforming global payments. He announced the launch of an international e-CNY operations center in Shanghai to expand the global reach of the digital yuan. This development underscores China’s commitment to enhancing the international use of the yuan through digital means.

Chinese exporters are increasingly opting for US dollar stablecoins like Tether (USDT) to settle trades, bypassing capital controls and currency risk. This trend highlights the growing demand for stable digital assets in international trade and finance. The push by JD.com and Ant Group for yuan-backed stablecoins aims to provide a viable alternative, potentially increasing the use of the yuan in global transactions.

In summary, the initiative by JD.com and Ant Group to launch yuan-backed stablecoins in Hong Kong represents a strategic move to enhance the global role of the yuan. By providing a stable digital asset for financial transactions, these stablecoins could challenge the dominance of the US dollar in global financial markets. The approval of these stablecoins would also have implications for the regulatory framework governing digital currencies in China, potentially prompting the PBOC to provide a more favorable environment for private-sector initiatives in the digital currency space.