Shanghai Regulator Reassessing Stance on Stablecoins, Crypto

China is reviewing its policies in regard to stablecoins and digital currencies, which is significant news, given the country has banned crypto trading for several years.

A regulator in China’s financial capital Shanghai said he met on Thursday with local officials to consider strategic responses to stablecoins and digital currencies.

The meeting was organised by the Shanghai State-owned Assets Supervision and Administration Commission and follows calls by experts and major companies in China to develop a yuan-pegged stablecoin.

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He Qing, director of the city regulator, told the meeting they need to have “greater sensitivity to emerging technologies and enhanced research into digital currencies,” according to a post on the body’s official WeChat account.

Photos of the meeting showed some 60-70 attendees.

Shanghai is China’s main international financial hub and often leads pilot programmes for regulatory change.

Stablecoins – which are typically pegged to a fiat currency and offer faster and cheaper transactions – have gained much momentum worldwide.

In the US, where the legal framework is more developed, more and more companies such as Amazon and Walmart are looking at launching stablecoins.

JD.com, Alibaba pushing for yuan stablecoin

In China, e-commerce firm JD.com and fintech giant Ant Group are urging the central bank to authorise yuan-based stablecoins to counter the growing sway of US dollar-linked cryptocurrencies, sources have said.

The companies plan to apply for stablecoin licences in Hong Kong, where stablecoin legislation is scheduled to take effect on August 1.

A policy expert from Guotai Haitong Securities spoke at the Shanghai meeting about the history, types and characteristics of cryptocurrencies and stablecoins, and analysed global regulatory frameworks and strategic approaches, the regulator’s post said.

The expert explained the opportunities and challenges facing stablecoins and offered policy suggestions for digital currency development, the post added.

Bitcoin soars, but PBOC cool

In addition to stablecoins, other digital currencies have also been gaining in popularity, with bitcoin BTC climbing to an all-time high of $118,661 on Friday.

“The latest rally comes despite global economic and geopolitical uncertainty, leading to speculation that investors are increasingly viewing the world’s most valuable cryptocurrency as a safe-haven asset like gold,” a report by The Independent in Britain said on Thursday.

Any change in China may not come easily. The central bank’s governor Pan Gongsheng said last month that the boom in digital currencies and stablecoins poses huge challenges to financial regulation.

Mainland China banned cryptocurrency trading and mining in 2021 due to concerns about the stability of the financial system.