tl;dr
Hong Kong's HKMA denied issuing a license for a yuan-pegged stablecoin, warning against digital currency fraud as regulators tighten controls. Meanwhile, China expands its CBDC in Shanghai, signaling global financial competition.
**Hong Kong’s Central Bank Clarifies Stablecoin Licensing, While Regulators Warn Against Digital Currency Fraud**
Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), has denied issuing a license for a stablecoin pegged to the offshore yuan, refuting recent media reports and emphasizing its strict regulatory stance on digital assets. In a statement posted on WeChat, the HKMA warned investors against falling for projects claiming to have received a license under its newly implemented Stablecoin Ordinance, which came into effect on August 1. The watchdog clarified that no licenses had been issued under the framework, and any token falsely promoted as regulated by the HKMA would be illegal.
This clarification follows a surge in speculation surrounding AnchorX, a Hong Kong-based fintech firm, which announced plans to launch the first stablecoin pegged to the offshore yuan, named AxCNH. The token aims to facilitate cross-border payments between Chinese companies and partners in Belt and Road regions. However, the HKMA’s statement underscores the risks of unregulated stablecoin projects, adding to a growing list of warnings from local regulators.
**Regulatory Vigilance Amid Rising Fraud Risks**
The HKMA’s warning aligns with broader concerns about digital currency fraud. A month prior, the Securities and Futures Commission (SFC) cautioned investors against companies exploiting the stablecoin trend to lure investors with unsubstantiated claims. SFC CEO Julia Leung urged caution, highlighting the dangers of projects promising gains through short-term price volatility and social media-driven hype.
The Stablecoin Ordinance, introduced to bring clarity to the sector, has imposed stringent capital, liquidity, and anti-money laundering (AML) requirements on issuers. While these measures aim to safeguard financial stability, they have also created barriers for smaller firms. Industry sources note that many startups, initially eager to apply for licenses, are now waiting for larger players like Ant Group and JD.com to navigate the process first.
**Cautious Optimism and Industry Challenges**
Despite the hurdles, the HKMA’s framework has been praised for positioning Hong Kong as a global leader in stablecoin regulation. Yat Siu, founder of Animoca Brands, called the ordinance a “blueprint for others,” emphasizing its potential to attract users by ensuring safety. However, compliance costs remain a challenge. Certik’s Esme Pau noted that the capital requirements are prohibitive for many, creating a dilemma between regulatory adherence and profitability.
The HKMA itself has tempered expectations, with Chief Executive Eddie Yue stating that only a “handful of licenses” would be issued, leaving many applicants disappointed. This cautious approach contrasts with initial industry hopes for a surge in stablecoin issuers in Hong Kong.
**Collaborations and Cross-Border Ambitions**
Amid the regulatory landscape, partnerships are emerging. Animoca Brands, in collaboration with Standard Chartered and Hong Kong Telecom, launched Anchorpoint in August, a joint venture aiming to issue a stablecoin in the region. Such initiatives reflect ongoing efforts to leverage Hong Kong’s regulatory environment for innovation.
**China’s CBDC Expansion in Shanghai**
Meanwhile, mainland China is advancing its own digital currency ambitions. The People’s Bank of China (PBoC) has established a new operations center in Shanghai, focusing on cross-border payments and blockchain services as part of its broader CBDC project. The center aims to enhance the internationalization of the digital yuan, with plans to launch platforms for blockchain services, cross-border digital payments, and digital assets.
Experts suggest the move signals China’s intent to position the yuan as a key player in global finance. PBoC Deputy Governor Lu Lei highlighted the development of a cross-border payments system using the digital yuan, alongside collaborations with BRICS nations and regional partners like Thailand and the UAE through the mBridge project.
Professor Tian Xuan of Tsinghua University noted that the center underscores China’s goal to expand its influence in the global financial system, offering “an open, inclusive, and innovative Chinese solution” for cross-border transactions.
As Hong Kong and mainland China navigate their respective paths in digital finance, the interplay between regulation, innovation, and global competition will shape the future of stablecoins and CBDCs in the region.