China has begun pilot testing stablecoins in Hong Kong, aiming to promote the international use of the yuan and reduce dependence on the US dollar. This move is driven by concerns over capital outflows and the strengthening position of the American currency in the global economy.
This is reported by Finway
Hong Kong as a Testing Ground for Cryptocurrency Experiments
After a years-long ban on cryptocurrencies in mainland China, Hong Kong has become a key experimental ground for the implementation of innovative financial technologies. In the past two months, Chinese regulators have actively consulted with analysts and experts regarding future policies in the field of cryptocurrencies and, in particular, stablecoins. The main obstacle to the widespread adoption of these assets remains the risks of money laundering and potential capital outflows.
In 2024, the Supreme People’s Court and the Supreme People’s Procuratorate of China officially recognized operations with crypto assets as one of the methods of money laundering. At the same time, a law was recently passed in Hong Kong allowing licensed companies to issue stablecoins pegged to any fiat currency. The Hong Kong Monetary Authority (HKMA) maintains a cautious policy, issuing licenses only to a limited number of applicants.
“Any stablecoin project in China must be compatible with the national conditions of the country.”
Chinese officials emphasize the need to maintain control over the financial system during the implementation of technologies. The head of the People’s Bank of China, Pan Gongsheng, stated that the emergence of stablecoins has “fundamentally changed the traditional payment landscape.”
Regulatory Challenges and a Cautious Approach
The HKMA carefully examines the business models, sources of reserves, and dispute resolution mechanisms of companies seeking to participate in the “sandbox” for testing stablecoins. Officials stress that the main priority is the stability of the financial system and adherence to strict standards. According to Paul Tang, director of the Hong Kong Money Service Operators Association, the first projects will be focused on the B2B segment, which will limit their initial spread.
“We are seriously concerned about market speculation and excessive enthusiasm.”
Chinese state-owned companies are also showing interest in implementing stablecoins, particularly in the area of cross-border payments. Several state enterprises are already preparing applications for licenses, but of the four major state banks, only one will receive a license in the initial phase.
The HKMA is considering the possibility of approving stablecoins pegged to offshore yuan, which would promote China’s currency in international transactions. The use of stablecoins in cross-border payments potentially allows bypassing traditional systems like SWIFT, which Beijing considers risky in the event of conflicts.
At the same time, experts acknowledge that competition with American stablecoins remains a challenging task for China. As Chen Ling, director of the Financial Innovation Center at the University of Hong Kong, noted:
“Competing with a system of stablecoins backed by the US dollar is very difficult. Hong Kong is making efforts, but there is still a long way to go,” Chen Ling acknowledged.
It is also known that JD.com’s subsidiary, JD Coinlink, plans to launch its own stablecoins in Hong Kong by the fourth quarter of 2025.