Shanghai’s Assets Supervision Commission Considers Policy For Stablecoins, Cryptos
Shanghai’s Assets Supervision Commission Considers Policy For Stablecoins, Cryptos
China's main international financial hub often leads pilot programs for regulatory change
The Assets Supervision and Administration Commission (ASAC) has said that it held a meeting, attended by 60-70 officials, for local administrators to consider strategic responses to yuan-pegged stablecoins and digital currencies.
This is a marked shift for Mainland China, which banned cryptocurrency trading and mining in 2021 due to concerns about the stability of the financial system.
He Qing, the ASAC director, posted on the official WeChat account that they needed to have "greater sensitivity to emerging technologies and enhanced research into digital currencies.”
Shanghai is China's main international financial hub and often leads pilot programs for regulatory change.
Nick Ruck, director at LVRG Research, stated, "Given China's strong fintech ecosystem, it has the potential to be a key player in shaping the future of blockchain-based payments.”
Blockchain-based stablecoins are pegged to a fiat currency and offer faster and cheaper transactions. These have gained momentum worldwide.
An ARK Investment Management estimate put the transaction value of stablecoins globally last year at $15.6 trillion. This surpassed that of Visa, as the value per transaction tends to be much higher.
In the U.S., where the legal framework is more developed, several companies, including Amazon and Walmart, are contemplating to launch stablecoins.
In Asia, South Korea's new government has guaranteed allowing companies to introduce won-based stablecoins and develop the necessary infrastructure, though the central bank has cautioned that it should be adopted gradually.
Meanwhile, China’s e-commerce firm JD.com and fintech giant Ant Group are the central banks to authorise yuan-based stablecoins to counter the growing sway of U.S. dollar-linked cryptocurrencies.
The companies plan to apply for stablecoin licences in Hong Kong, as the legislation would be effective on 1 August.
At the Shanghai meeting, a policy expert from Guotai Haitong Securities spoke about the history, types and characteristics of cryptocurrencies and stablecoins.
While analysing the global regulatory frameworks and strategic approaches, the expert explained the opportunities and challenges facing stablecoins and offered policy suggestions for digital currency development.
Recently, Yang Tao, the deputy director of the think tank National Institution for Finance and Development, suggested that China should simultaneously explore the issuance of yuan-based stablecoins in Shanghai’s Pilot Free Trade Zone and in Hong Kong.
However, any change may not happen easily in China, as the country's capital controls pose a key hurdle to the development of stablecoins.
Recently, the central bank governor Pan Gongsheng expressed that the boom in digital currencies and stablecoins posed huge challenges to financial regulations.
While the debate around stablecoins in China rises, the outlook for other cryptocurrencies is less clear. Outside Mainland China, non-stablecoin digital currencies continue to increase in popularity, with bitcoin climbing to an all-time high above $118,000.
