- Shanghai’s financial regulator held a high-level meeting to explore policy responses to stablecoins and digital currencies.
- Major Chinese firms like JD.com and Ant Group push for yuan-backed stablecoins.
- While interest grows, China’s central bank remains cautious, warning of the regulatory risks of Bitcoin.
A key financial regulator in Shanghai convened a meeting this week to discuss policy responses to stablecoins and cryptocurrencies. The development marks a potential transition in China’s strict stance on crypto assets.
The gathering was organized by the Shanghai State-owned Assets Supervision and Administration Commission (SASAC). It brought together 60 to 70 local officials and experts to explore strategic approaches to emerging digital currencies.
Calls for Yuan-Pegged Stablecoins Gain Momentum
In parallel with the global adoption of stablecoins, major Chinese companies, including e-commerce giant JD.com and fintech leader Ant Group, have urged the People’s Bank of China (PBOC) to authorize yuan-pegged stablecoins.
These firms view yuan-backed digital currencies as a means to challenge the growing dominance of US dollar-linked stablecoins. Sources reveal that these companies are preparing to apply for stablecoin licenses in Hong Kong, where new legislation is set to take effect on August 1.
Related: China’s Answer to the Digital Dollar: A New Push for a Yuan-Backed Stablecoin
Shanghai’s Regulator Emphasizes Research and Sensitivity
He Qing, director of the Shanghai SASAC, noted the need for “greater sensitivity to emerging technologies and enhanced research into digital currencies” during the meeting.
A policy expert from Guotai Haitong Securities briefed attendees on the global regulatory landscape. It also captured the various types of cryptocurrencies and stablecoins, as well as the opportunities and challenges they present.
The session highlighted the importance of developing strategic policy frameworks to guide China’s digital currency future.
Bitcoin’s Rally and China’s Regulatory Challenges
While the meeting reflects increasing openness, the Chinese government remains cautious. This week, Bitcoin surged to an all-time high near $118,400, underscoring the growing global interest in cryptocurrencies. Notably, the Chinese government holds 194,000 BTC worth approximately $22.89 billion.
Related: China Bans Holding of Bitcoin and All Cryptocurrencies, Report Says
Meanwhile, the governor of the PBOC, Pan Gongsheng, warned last month about the significant challenges digital currencies pose to financial stability and regulation. Crypto trading and mining have remained banned on the mainland since 2021.
However, looking ahead, Shanghai’s role as China’s international financial hub positions it as a likely pilot zone for any future regulatory innovation in digital currencies. The evolving discussions and corporate lobbying efforts suggest that China may soon explore more policies regarding yuan-backed stablecoins to balance between innovation and strict regulatory oversight.
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