JD.com Ant Group Push for Yuan Stablecoins to Challenge Dollar Dominance

JD.com and Ant Group, two prominent Chinese tech firms, are actively advocating for the People’s Bank of China (PBOC) to approve the issuance of yuan-based stablecoins. This move is aimed at strengthening the yuan's global standing and challenging the dominance of US dollar-pegged tokens. The companies propose that these stablecoins be backed by offshore yuan, which is the yuan that circulates outside mainland China, and suggest launching them in Hong Kong. This strategy is intended to boost the yuan's role in international trade and diminish the dollar's influence.

During recent private meetings with the PBOC, JD.com executives stressed the importance of introducing yuan stablecoins to enhance the currency's international usage. Both JD.com and Ant Group are reportedly in the process of applying for stablecoin licenses in Hong Kong and Singapore. JD.com has also proposed initiating yuan stablecoin issuance in Hong Kong before expanding to China’s free trade zones, with initial regulatory feedback being positive.

The discussions are taking place as Hong Kong works to establish regulations for stablecoins. The region recently unveiled its new digital asset plan, which focuses 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 new framework, the government will implement a licensing regime for stablecoin issuers starting August 1, which is expected to facilitate the development of real-world use cases.

In June, JD.com founder Liu Qiangdong announced that the e-commerce giant plans to apply for stablecoin licenses in all major sovereign currency countries worldwide. This announcement followed 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. Gongsheng envisions a “multipolar” currency system where multiple currencies support the global economy, contrasting with the current system where a few currencies, like the US dollar and the euro, play significant roles.

The stablecoin market currently has a market cap of over $258 billion, with all of the top 10 stablecoins by market cap being dollar-denominated. EURC, pegged to the euro, is the largest non-dollar stablecoin, ranking 11th in terms of market cap. The push for yuan-based stablecoins is seen as a strategic move to counter the dominance of dollar-pegged tokens and promote the yuan's international use. Industry veteran Wang Yongli, former deputy head of Bank of China, warned that if yuan cross-border payments remain less efficient than dollar stablecoins, it poses a strategic risk for China. This initiative by JD.com and Ant Group is part of a broader effort to enhance the yuan's role in global trade and reduce the dollar's influence.