Chinese tech companies, including Ant Group and JD.com, have reportedly paused their plans to issue stablecoins in Hong Kong.

This decision follows concerns raised by Beijing regarding the rise of currencies controlled by the private sector, reported Financial Times.

The companies had initially planned to participate in Hong Kong’s pilot stablecoin programme or issue virtual asset-backed products.

The People’s Bank of China (PBoC) and the Cyberspace Administration of China (CAC) instructed these companies not to proceed with their stablecoin ambitions.

 PBoC officials advised against participating in the initial stablecoin rollout due to concerns about tech groups and brokerages issuing any type of currency.

A source familiar with the central bank’s briefings stated that privately run stablecoins pose a challenge to the PBoC’s digital currency project, the e-CNY.

Another source questioned, “The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?”

Stablecoins, pegged to fiat currencies such as the US dollar, are central to crypto trading. The pushback from Chinese authorities highlights global regulatory concerns about stablecoins. The European Central Bank has noted that widespread adoption of dollar stablecoins could impede its monetary policy control.

The Hong Kong Monetary Authority began accepting applications for stablecoin issuers in August, positioning Hong Kong as a testing ground for mainland China. Interest in the Hong Kong programme grew over the summer, with some officials suggesting renminbi-denominated stablecoins could enhance the yuan’s international use.

Zhu Guangyao, former vice-minister of finance in China, argued in June emphasised the importance of China developing a renminbi-pegged stablecoin, stating, “The renminbi stablecoin must be integrated into the overall design of the national financial strategy.”

However, following a speech by former PBoC governor Zhou Xiaochuan in late August, financial regulators adopted a more cautious approach. Zhou, at a financial forum in July, called for a comprehensive evaluation of stablecoins and their potential systemic risks.

Zhou warned against the excessive use of stablecoins for asset speculation, which could lead to fraud and financial instability. He stated, “Although many believe stablecoins will reshape the payments system, in reality, there is little room to cut costs in the current system, particularly in retail payments.”

The PBoC declined to comment, while the Hong Kong Monetary Authority stated it does not comment on market rumours. CAC, Ant, and JD.com did not respond to requests for comment, reported the media outlet.