Shanghai’s regulator has begun exploring the possibility of yuan-pegged stablecoins

What’s new? Shanghai’s State-owned Assets Supervision and Administration Commission has met with local government officials and industry experts to consider the use of stablecoins, a marked change in approach for mainland China, where cryptocurrency trading is banned.

Material by Reuters

What else is known? The meeting was organized in response to calls from experts and major Chinese companies to develop a stablecoin pegged to the yuan.

We need to have “greater sensitivity to emerging technologies and enhanced research into digital currencies,” said He Qing, the regulator’s director.

During the meeting, a policy expert from broker Guotai Haitong Securities talked about the history, types, and characteristics of cryptocurrencies and stablecoins, and analyzed global regulatory frameworks and strategic approaches.

The expert talked about the opportunities of stable coins and the challenges accompanying their use, and offered policy recommendations for the development of the digital currency sector.

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Shanghai is China’s main international financial center and often leads pilot programs for regulatory change. At the same time, mainland China banned cryptocurrency trading and mining back in 2021 due to concerns about the stability of the financial system.

In turn, Hong Kong, as a special administrative region of the People’s Republic of China, has embarked on a course of development as a regional crypto hub. Local authorities have allowed licensed retail crypto exchanges and spot exchange-traded crypto funds with staking capabilities, and professional investors have gained access to crypto derivatives.

On August 1, Hong Kong’s stablecoin law comes into effect, which requires issuers of fiat currency-pegged assets to obtain a license, keep client assets separate from their own, and comply with AML standards.

In June, it became known that leading Chinese e-commerce platform JDcom will launch its own asset JD Stablecoin and apply for licenses to operate with stablecoins in all major countries.