JD.com and Ant Group are urging China to launch yuan-based stablecoins to boost the currency’s global role and compete with US dollar-pegged tokens.
China’s largest e-commerce company, JD.com, and Alibaba’s fintech subsidiary, Ant Group, are urging the People’s Bank of China (PBOC) to approve Chinese yuan-based stablecoins to combat the global expansion of US dollar-pegged tokens.
According to sources familiar with the situation, Reuters reported Thursday that the two companies urged regulators to permit the launch of stablecoins backed by offshore yuan (Chinese yuan that circulates outside mainland China) in Hong Kong, arguing that doing so would increase the yuan’s role in international trade while reducing the influence of the dollar.
According to the source, JD.com executives emphasized that yuan stablecoins are desperately needed to encourage the currency’s foreign adoption at recent private meetings with the PBOC.
According to reports, JD.com and Ant are preparing to submit applications for stablecoin licenses in Singapore and Hong Kong. Additionally, JD.com is said to have suggested launching the yuan stablecoin’s issuance in Hong Kong before extending pilots to China’s free trade zones; officials have reportedly responded favorably to this proposal thus far.
Ineffective Yuan payments put the dollar’s dominance at risk.
The yuan’s percentage of international payments fell to 2.89% in May, the lowest level in almost two years. According to Reuters, which cited statistics from payment company Swift, the dollar has a dominant 48% dominance.
According to the newspaper, industry veteran Wang Yongli, the former deputy head of Bank of China, issued a warning last month that China faces a strategic danger if yuan cross-border payments continue to be less effective than dollar stablecoins.
The talks take place as Hong Kong scrambles to create stablecoin regulations. The region’s new digital asset plan, which focuses on regulating stablecoins and encouraging asset tokenization through its “LEAP” framework, was unveiled last week. Its goals include talent development, ecosystem expansion, legal clarity, and real-world usage.
The government plans to introduce a license system for stablecoin issuers on August 1st as part of the new framework, which “will facilitate the development of real-world use cases.”
To apply for stablecoin licensing, visit JD.com.
According to Liu Qiangdong, the founder of JD.com, the e-commerce behemoth intends “to apply for our stablecoin license in all major sovereign currency countries in the world” in June.
PBOC Governor Pan Gongsheng announced plans to open an international digital yuan operations center in Shanghai to internationalize the digital yuan and lessen reliance on the US currency worldwide.
Gongsheng stated at the time that China aspires to a “multipolar” currency system in which several currencies support the world economy. The current system, in which a small number of currencies, such as the US dollar and the euro, play significant roles in the global financial system, opposes this concept.
According to CoinMarketCap data, the stablecoin market capitalization is currently around $258 billion. The top ten stablecoins by market capitalization are all denominated in dollars. The largest non-dollar stablecoin, EURC (EURC), is based on the euro and is ranked 11th in terms of market capitalization.
