JD.com and Ant Group Push for Yuan Stablecoins to Boost Global Influence

JD.com and Ant Group, two prominent Chinese technology firms, have been actively engaging with the People’s Bank of China (PBOC) to advocate for the approval of yuan-based stablecoins. This initiative is aimed at bolstering the yuan's global influence and providing a viable alternative to the dominance of US dollar-pegged stablecoins in the digital payments landscape.

During recent private meetings with the PBOC, executives from JD.com emphasized the urgent need for yuan stablecoins to promote the currency’s international use. The companies are reportedly preparing to apply for stablecoin licenses in Hong Kong and Singapore, with JD.com proposing to initiate yuan stablecoin issuance in Hong Kong before expanding to China’s free trade zones. Early feedback from regulators has been described as positive, indicating a potential green light for these initiatives.

The push for yuan stablecoins comes at a time when the yuan's share of global payments has been declining. Industry experts have warned that inefficient yuan cross-border payments pose a strategic risk for China if not addressed. The approval of yuan-based stablecoins could significantly alter the landscape of global digital payments, providing a new option and potentially challenging the dominance of the US dollar in the stablecoin market.

JD.com founder Liu Qiangdong has stated that the e-commerce giant plans to apply for stablecoin licenses in all major sovereign currency countries. This announcement follows PBOC Governor Pan Gongsheng's plans to establish an international digital yuan operations center in Shanghai. The goal is to internationalize the digital yuan and reduce global reliance on the US dollar, envisioning a “multipolar” currency system where multiple currencies support the global economy.

Hong Kong, which is racing to establish rules for stablecoins, announced a new digital asset plan centered on regulating stablecoins and promoting asset tokenization through its “LEAP” framework. This framework aims to provide legal clarity, foster ecosystem growth, encourage real-world adoption, and develop talent. As part of this plan, the government will implement a licensing regime for stablecoin issuers starting August 1, facilitating the development of real-world use cases.

JD.com and Ant Group believe that a yuan-pegged stablecoin would facilitate the expansion of applications of Chinese money in international transactions. In so doing, they expect to facilitate the cross-border yuan payments to be quicker and cheaper. They wish also to provide an alternative to dollar-collateralized stablecoins that are used by Chinese exporters. However, the future presents some obstacles. At home, China continues to prohibit cryptocurrencies. As a result, its leaders start to pay more attention to stablecoins and their effects on economics. Recently, Pan Gongsheng, the governor of the central bank of China said that digital currencies and stablecoins present huge issues to regulators.

According to an interview with the PBOC advisor, Huang Yiping, it is possible to have an offshore yuan stablecoin in Hong Kong. This indicates that the leaders in China are willing to consider the option of adopting stablecoins to advance the adoption of the yuan globally. Meanwhile, JD.com and Ant Group do not waste time. One of the biggest online retailers, JD.com, has announced that its chairman, Richard Liu, plans to seek stablecoin-license in many countries. He aims at making companies deal with foreign exchange and international payments more conveniently.

JD.com also plans to launch a Hong Kong dollar-pegged stablecoin by the end of this year. However, the company feels that the yuan stablecoin is more significant. JD.com has informed the Central Bank of China that the Hong Kong dollar is pegged to the U.S. dollar. Therefore, it is not conducive to popularizing the use of the yuan in commerce. They sought approval to launch yuan stablecoins in Hong Kong initially and then spread to the other free trade zones. Ant Group is also set to apply for stablecoin licenses. The sources say that Ant seeks the approval in Hong Kong, Singapore, and Luxembourg. This would assist the firm to expand its blockchain payments across the globe.