- Mainland Chinese companies in Hong Kong may face new limits on stablecoin and crypto activities.
- Chinese state-owned enterprises and banks with Hong Kong branches are expected to halt efforts to obtain stablecoin licenses.
- Authorities in Hong Kong are considering relaxing capital rules for banks handling crypto assets.
- China has instructed local firms to stop certain research and seminars on stablecoins due to fraud concerns.
- There are signs of cautious interest in yuan-backed stablecoins for international use.
Mainland Chinese technology firms, state-owned enterprises, and financial institutions in Hong Kong may soon be restricted from engaging in stablecoin and cryptocurrency activities. This comes after recent policy changes reported by local outlet Caixin on September 11.
These changes are expected to halt the pursuit of stablecoin licenses by Hong Kong branches of several major Chinese banks and state-owned firms. Under Hong Kong’s new stablecoin regulations, which started on August 1 and include a six-month transition phase, 77 institutions had earlier shown interest in applying for stablecoin licenses.
An anonymous industry insider told Caixin that applicants such as banks and financial firms from mainland China would likely withdraw or delay their license submissions. “Hong Kong’s stablecoin business is just beginning, and its future direction is unclear,” the source stated, advising companies “not to rush into participation.”
Chinese companies had previously moved to set up their presence before the policy change. In August, a China Merchants Bank subsidiary launched a crypto exchange for institutions in Hong Kong. E-commerce firm JD.com and Ant International also registered stablecoin-related entities in Hong Kong and Singapore around the time the new rules went into effect.
At the same time, another report by Caixin states that the Hong Kong Monetary Authority (HKMA) is considering lowering capital requirements for banks interacting with crypto. The agency plans to adjust regulations to help banks work with regulated stablecoins and support investments in digital assets on public blockchains. The HKMA did not provide a comment for this report.
China’s approach to stablecoins remains cautious. In early August, officials reportedly told firms to stop stablecoin-related research and seminars, citing risks of fraud. However, according to reports in late August, Chinese regulators are considering authorizing stablecoins backed by the yuan, aiming to boost the currency’s global use. The Shanghai State-owned Assets Supervision and Administration Commission has also discussed strategic responses to digital currencies.
In July, blockchain company Conflux introduced a new stablecoin tied to Chinese yuan held outside China. This token is designed for use in countries connected to China’s Belt and Road initiative and is not allowed within mainland China.
For more details, see the original Caixin report and related coverage on capital rule adjustments.
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