Ant Group and JD.com have suspended their stable currency initiatives. What will be the future of st

As the market expects Hong Kong to become a hub for stablecoins in Asia, Ant Group and JD Technology have both announced the suspension of their respective stablecoin initiatives. This news caused quite a stir in the crypto community. Hong Kong, once considered a key player in promoting the Web3 financial ecosystem, now seems to have slowed down its progress, prompting people to rethink the delicate balance between regulatory policies and market conditions. With stricter regulations surrounding stablecoins worldwide and the dollar’s dominance increasing, Hong Kong’s policy direction becomes particularly important—should it continue to embrace innovation, or should it adopt more cautious approaches? The debate over the future of stablecoins may just be beginning.

On August 1st this year, Hong Kong officially implemented the “Stablecoins Regulations”. According to public data, as of September 30th, 36 institutions had submitted applications. It is expected that the first batch of licenses will be announced in the first quarter of next year.

However, yesterday, the Financial Times reported that several mainland companies, including Ant Group and JD Technology, had suspended their stablecoin initiatives after receiving instructions from the People’s Bank of China and the National Internet Information Office to refrain from promoting such initiatives. This move indicates that regulators still have concerns about private enterprises developing stablecoin businesses.

After hearing this news, some friends asked me for my opinion, worried that Hong Kong’s stablecoin policies might be affected. I have been following the latest developments regarding Hong Kong’s policies, so I decided to investigate further and provide some analysis to help calm everyone’s fears.

It is expected that Hong Kong’s stablecoin policies will not be significantly impacted.

The report quotes officials from central banks as warning that any form of “currency” issued by technology companies or securities firms could undermine the central bank’s monetary authority. The issuance of stablecoins by private entities would be seen as a challenge to the digital yuan project led by central banks.

The key point is clear: these banned stablecoin projects all target the renminbi or offshore renminbi as their base currency. This contradicts the digital yuan strategy implemented by the People’s Bank over the years. Digital yuan trials have been underway for several years, and I have used it myself, but currently, the range of supported scenarios is still limited.

The regulatory action taken by the People’s Bank is essentially due to the fact that stablecoins based on the renminbi, whether onshore or offshore, overlap significantly with digital yuan’s usage cases. Both aim to replace cash (M0) and are used for cross-border transactions. In other words, the regulation only prevents the development of CNY-based stablecoins in Hong Kong, without affecting applications for other types of stablecoins.

What kind of stablecoins are more likely to be approved in Hong Kong?

This requires further consideration in my previous article on RWA in Hong Kong.

Currently, stablecoins based on US dollars, bonds, and funds appear to have the most promising prospects for approval. In particular, interest-bearing assets such as US government bonds and US dollar money market funds are expected to have a higher approval rate compared to other monetary assets.

This judgment is based on the issuance mechanism of the Hong Kong dollar. Currently, there are three banks responsible for issuing Hong Kong dollars: HSBC, Standard Chartered, and Bank of China (Hong Kong). These banks must pay the Hong Kong Monetary Authority a fixed exchange rate in US dollars before they can issue Hong Kong dollars. This means that every Hong Kong dollar note is backed by 100% US dollar reserves.

Hong Kong naturally has a high acceptance of US dollar-based assets. The related mechanisms are well-established and have been thoroughly tested. I expect that such stablecoins will have a higher approval rate and may be approved sooner.

The financial system in Hong Kong might eventually adopt a dual-track system.

Historically, Hong Kong’s use of US dollars to issue the Hong Kong dollar stemmed from its status as an international financial center. Most foreign trade and financial transactions are denominated in US dollars. However, with the increasing tensions in Sino-US financial trade relations in 2025, the People’s Bank of China’s decision to ban the issuance of stablecoins may reflect deeper strategic considerations.

In my opinion, the greater value of the digital RMB lies in its ability to promote the internationalization of the RMB. Hong Kong could become an important hub for promoting this initiative. In the future, the issuance mechanism of the Hong Kong dollar may adopt a new dual-track system—while maintaining the current 100% US dollar reserve ratio, the proportion of digital RMB and other assets will gradually increase, resulting in a more diversified reserve structure.