Jingdong and Ant Group's stablecoins have been banned! British media: China's intervention has led to a complete halt.

The Financial Times reported on October 19 that after concerns were raised by China regarding the rise of privately controlled currencies, Chinese tech giants have suspended plans to issue stablecoins in Hong Kong. Several companies, including the Alibaba-backed Ant Group stablecoin and the e-commerce giant JD's stablecoin, had expressed intentions to participate in Hong Kong's stablecoin pilot program this summer.

China intervenes: Tech giants fully suspend stablecoin

Several companies, including the stablecoins supported by Alibaba's Ant Group and the e-commerce group JD.com, have indicated this summer that they will participate in Hong Kong's stablecoin pilot program or issue tokenized bonds and other virtual asset-backed products. However, according to several informed sources, these companies have put their stablecoin plans on hold after receiving instructions from Chinese regulatory authorities, including the People's Bank of China and the National Internet Information Office, requesting them not to advance stablecoin projects.

Five informed sources said that due to concerns about allowing technology groups and brokerages to issue any type of currency, officials from the People's Bank of China recommended not participating in the initial issuance of stablecoins. This shift in regulatory stance has brought the originally promising JD stablecoin and Ant Group stablecoin plans to a sudden halt.

A person familiar with the situation reported to the technology group by the central bank stated that the issuance of private Ant Group stablecoin is also seen as a challenge to China's central bank digital currency. Another informed source said, “The real regulatory concern is who holds the ultimate minting rights - the central bank or any private company in the market?”

This issue touches on the core of monetary sovereignty. In the modern monetary system, the right to issue currency has always been a core component of national sovereignty. Allowing private enterprises to issue stablecoins pegged to fiat currency is, to some extent, sharing this sovereign power. For a country like China, which emphasizes financial stability and government control, this decentralization of power is clearly unacceptable.

Core concerns requested by regulatory authorities to be suspended:

Minting Rights Ownership: Private stablecoins challenge the central banks' monopoly on currency issuance.

Digital Renminbi Competition: Private stablecoins may siphon users and use cases away from the digital renminbi.

Financial Stability Risks: The issuance of currency by tech giants may pose systemic financial risks.

Regulatory Control: Private stablecoins are difficult to regulate effectively like traditional financial institutions.

Hong Kong Stablecoin Pilot: From Open to Tightening Policy Shift

The Hong Kong Monetary Authority began accepting applications from stablecoin issuance institutions in August, making it a testing ground for mainland stablecoins. In mainland China, interest in Hong Kong's stablecoin projects surged during the summer, with some officials stating that stablecoins denominated in RMB could promote the international use of the RMB.

Former Vice Minister of Finance of China, Zhu Guangyao, stated in June this year that “the strategic purpose of the United States promoting stablecoins is to maintain the hegemony of the US dollar,” and that China's response to this financial challenge hinges on the development of stablecoins linked to the Renminbi. Zhu Guangyao mentioned at a forum in Beijing in June this year: “We should fully utilize the pilot projects in Hong Kong. The Renminbi stablecoin must be incorporated into the overall design of the national financial strategy.”

This statement shows that at the early stages of policy formulation, some officials indeed recognized the strategic value of stablecoins. However, with the concretization of JD's stablecoin and Ant Group's stablecoin plans, the attitude of the decision-making body has subtly shifted. From encouraging pilot programs to demanding a pause, it reflects the existence of different voices within the policy, with the concerns of conservatives ultimately prevailing.

Stablecoins are digital tokens pegged to fiat currencies like the US dollar, serving as the cornerstone of cryptocurrency trading. The Financial Times noted that the resistance from Chinese authorities highlights how global regulators are actively responding to the rise of stablecoins, especially after the Trump administration strongly endorsed stablecoins as a mainstream financial pillar and a tool to reinforce the dominance of the US dollar. The European Central Bank has already indicated that the widespread adoption of US dollar stablecoins could undermine its ability to control monetary policy.

Zhou Xiaochuan's speech reverses policy: concerns about systemic risk emerge

However, the Financial Times reported that two people familiar with the technology group's plans said that after a speech by former People's Bank of China governor Zhou Xiaochuan at the end of August, financial regulators are taking a more cautious approach. In July this year, at a closed-door financial forum held in Beijing, Zhou Xiaochuan called for a comprehensive assessment of stablecoins and their potential systemic risks.

Zhou Xiaochuan stated at the China Financial Forty Forum: “We need to be vigilant about the risks of stablecoins being overly used for asset speculation, as misleading information could lead to fraud and instability in the financial system.” Zhou Xiaochuan called for a “careful assessment of the real demand for tokenization as a technological foundation.” He added, “Although many believe that stablecoins will reshape the payment system, in reality, there is almost no room for cost reduction in the existing system, especially in the retail payment sector.”

Zhou Xiaochuan's speech is seen as a turning point for the suspension of JD's stablecoin and Ant Group's stablecoin plans. As the former governor of the People's Bank of China, Zhou Xiaochuan holds great prestige in the financial policy-making circles. His doubts and warnings about stablecoins have evidently influenced the decisions of the current regulatory authorities. Zhou Xiaochuan's arguments mainly focus on two aspects: first, stablecoins may be used for speculation rather than actual payments, increasing financial risks. Second, in the Chinese market where the existing payment system is already very efficient, the actual demand for stablecoins is questionable.

This argument challenges the original intention of promoting stablecoin pilot programs. If the primary use of stablecoins is speculation rather than payment, then their financial innovation value will be greatly discounted. China already has the world's most developed mobile payment systems (such as Alipay), and the efficiency and cost of daily retail payments are already extremely low. Against this backdrop, the incremental value of stablecoins is indeed questionable.

Regulatory Bodies Remain Silent: A Clear Signal of Policy Direction

In response to reports from the Financial Times, the People's Bank of China declined to comment. The Hong Kong Monetary Authority stated that it does not comment on market rumors. The Cyberspace Administration of China, Ant Group, and JD.com have all not responded to requests for comments. This collective silence is in itself a strong signal that the suspension of JD.com's stablecoin and Ant Group's stablecoin plans is a real and sensitive policy decision.

Typically, when the media reports on significant policy or corporate decisions, the parties involved respond quickly to clarify or deny the information. However, in this case, all parties chose to remain silent or refused to comment, implying that the report is fundamentally true and that the parties believe it is not appropriate to discuss the matter publicly. This cautious attitude reflects the sensitivity of the stablecoin issue at the policy level in China.

From a broader perspective, the suspension of JD's stablecoin and Ant Group's stablecoin is the latest example of the Chinese government seeking a balance between financial innovation and financial stability. In recent years, China's regulation of the fintech industry has undergone a significant shift from encouraging innovation to strengthening regulation. The sudden halt of Ant Group's IPO in 2020 was a landmark event marking this policy shift. The suspension of the stablecoin plans continues this cautious and even tightening regulatory tone.

For the global stablecoin market, the exit of China's tech giants signifies the closing of a vast potential market. Ant Group and JD.com have hundreds of millions of users and a strong payment ecosystem; if they were to launch a stablecoin, it could quickly become one of the largest stablecoins in the world. However, regulatory concerns indicate that, at least in the short term, the Chinese market will not serve as a testing ground for private stablecoins. The digital renminbi, as a central bank digital currency, will continue to be the only form of digital currency promoted by the Chinese government.