Hong Kong’s Stablecoin Momentum Takes a Hit as China’s Anti-Crypto Hammer Falls Again

Key Takeaways

• The People’s Bank of China has said that it considers stablecoins amerciable nether China’s crypto ban.

• The latest crackdown serves arsenic a stroke to Hong Kong’s stablecoin ambitions.

• Hong Kong-listed crypto stocks tumbled connected Monday morning.

When Hong Kong launched its caller stablecoin authorities earlier this year, it was meant to usher successful a caller aureate property of regulated crypto for greater China.

However, Beijing’s crypto prohibition continues to formed a shadiness implicit the sector.

With the People’s Bank of China (PBOC) reaffirming its presumption connected Friday, Nov. 28, immoderate hopes of looser rules person been dashed, undermining Hong Kong’s stablecoin narrative.

While Hong Kong operates nether a antithetic regulatory authorities from the remainder of China, immoderate businesses person viewed the territory’s stablecoin model arsenic a imaginable doorway to the mainland market.

Retail giants JD.com and Ant Group are among those that person lobbied the cardinal slope to greenlight yuan-backed stablecoins successful Hong Kong.

Initially, determination were immoderate promising indicators that Beijing might be unfastened to the prospect.

However, aft gathering with different authorities departments connected Friday, the PBOC insisted that it considers stablecoins to beryllium amerciable nether China’s crypto ban.

Virtual currencies, including stablecoins, “do not clasp the aforesaid ineligible presumption arsenic fiat currency and cannot beryllium utilized arsenic ineligible tender successful the market,” it said successful a wide reported statement.

After the cardinal slope successful Beijing vowed to ace down connected stablecoin activity, Hong Kong crypto stocks took a beating erstwhile markets opened connected Monday.

As of 10 a.m. UTC, Yunfeng Financial Group was down much than 11% since Friday, portion shares successful OSL Group had declined by implicit 5 percent.

Crypto-adjacent stocks similar Guotai Junan International, Bright Smart Securities and Commodities Group besides suffered.

Despite Beijing’s pugnacious language, much than 4 years aft China moved to prohibition crypto, the state remains a hub for Bitcoin mining. Retail involvement successful integer assets has besides stubbornly persisted.

For mainland investors, underground trading desks, VPN-routed trading flows, and proximity to Hong Kong’s much flexible marketplace underpin a shadiness crypto economy.

For Hong Kong, this creates a strategical dilemma.

As the territory attempts to physique a regulated crypto ecosystem, its largest imaginable marketplace is legally off-limits.

But successful reality, postulation from the mainland drives important demand, creating a constituent of friction with Beijing that threatens to hamper its stablecoin ambitions.

The station Hong Kong’s Stablecoin Momentum Takes a Hit arsenic China’s Anti-Crypto Hammer Falls Again appeared archetypal connected ccn.com.