- Beijing bans SOEs, banks, and tech firms in Hong Kong from crypto and stablecoin ventures.
- Major Chinese banks expected to halt stablecoin license applications after policy shift.
- Restrictions likely to cut Hong Kong’s crypto trading volume and slow blockchain integration.
Beijing has ordered state-owned enterprises, Chinese banks, and major internet firms with Hong Kong operations to exit cryptocurrency ventures. The directive, reported by Caixin, bans their involvement in stablecoin issuance, trading, and investment, cutting directly into Hong Kong’s effort to position itself as a digital asset hub.
Related: Hong Kong Moves to Compete Globally by Softening Crypto Rules for Local Lenders
Stablecoin Licensing Program at Risk
Hong Kong rolled out its stablecoin licensing regime on August 1, offering a six-month transition period. Regulators said 77 institutions had expressed interest, including Hong Kong branches of state-owned lenders such as ICBC. With Beijing’s new order, insiders expect those applications to be suspended or withdrawn.
One senior banking source described Hong Kong’s stablecoin market as “unclear in direction,” warning that early participation risked misalignment with Beijing’s policy line.
Corporate Initiatives Stalled
Several Chinese corporates had already begun testing the market:
- A subsidiary of China Merchants Bank launched an institutional exchange in August.
- JD.com registered entities linked to potential stablecoin projects.
- Ant International filed for stablecoin operations in Hong Kong and Singapore in June.
Those moves are now expected to stall under Beijing’s directive.
Policy Extends Beyond Trading
The restrictions go further than direct participation. Caixin reported authorities had already instructed firms in August to halt seminars and research publications on stablecoins.
The latest order extends the ban to capital allocation into exchanges and related ventures.
Narrow Room for Offshore Yuan Stablecoins
Beijing has made limited allowances for yuan-backed stablecoins abroad. In July, Conflux introduced an offshore CNY stablecoin for circulation in Belt and Road countries. Use inside mainland China remains strictly barred.
Analysts at a regional think tank estimate Hong Kong accounted for about 15% of Asia-Pacific crypto trading volume. The restrictions are expected to cut that share and slow integration between blockchain services and the city’s traditional financial institutions.
Related: China Sets Legal Precedent in $111M Crypto Money Laundering Bust
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