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The cross-border e-commerce arm of Chinese tech giant Alibaba is working on a deposit token amid mainland China’s crackdown on stablecoins, according to CNBC.
Alibaba Chairman Kuo Zhang told CNBC on Friday report that the tech giant plans to use stablecoin-like technology to simplify overseas transactions. The model under consideration is a deposit token, which is a blockchain-based instrument that represents a direct claim on commercial bank deposits and is treated as a regulated liability of the issuing bank.
Traditional stablecoinsthat these tokens are very similar, they are issued by a private entity and backed by assets to maintain their value. The report follows JPMorgan Chase – the world’s largest bank by market capitalization – reported distribute its deposit token to institutional clients earlier this week.
The news also follows reports that Chinese tech giants, including Ant Group and JD.com, have suspended issuance plans. stablecoins in Hong Kong after the regulators Beijing has expressed displeasure with the plans. The report is just the latest of many suggesting that mainland Chinese authorities appear dead set on preventing a stablecoin industry from springing up in the country.
China says no to stablecoins
In July, both Ant Group and JD expressed interest to participate in Hong Kong’s stablecoin pilot program or launch tokenized financial products, such as digital bonds. Similarly, HSBC and the world’s largest bank by total assets – the Industrial and Commercial Bank of China – were reported to share these Hong Kong stablecoin ambitions in early September.
Related: Columbia Business professor questions tokenized bank deposits
Later in September, a now-deleted report from the Chinese financial outlet Caixin stated that Chinese firms are operating in Hong Kong may be forced to withdraw from cryptocurrency-related activities. According to the report, politicians have also imposed restrictions on the investments of mainland companies in crypto and cryptocurrency exchanges.
In early August, the Chinese authorities ordered local companies stop publishing research and holding seminars related to stablecoinsciting concerns that stablecoins could be exploited as a tool for fraudulent activity. However, China is not completely devoid of stablecoin ties.
Related: Custody, Vantage Bank’s launch platform for tokenized deposits
Offshore yuan stablecoins, not mainland money
At the end of July, the Chinese blockchain Conflux announced a third version of its public network and introduced a new one stablecoin backed by the offshore Chinese yuan. However, the stablecoin aims to serve offshore Chinese entities and countries involved in China’s Belt and Road Initiative – not the mainland.
At the end of September, a regulated stablecoin linked to the international version of Chinese yuan launched. However, this product is also aimed at foreign exchange markets and was launched at the Belt and Road Summit in Hong Kong, signaling a similar target market.
In fact, a recent analysis suggests that we should not wait Chinese stablecoins are allowed to circulate in the continent. Joshua Chu, co-chairman of Hong Kong’s Web3 Association, said that “China is unlikely to issue stablecoins onshore.”
Magazine: Hong Kong is not the loophole that Chinese crypto companies think it is
