Hong Kong sounds alarm on unapproved yuan-stablecoins: report

Hong Kong financial regulators warn investors to remain cautious of unapproved yuan-backed stablecoins, stating it has not issued any licenses for stablecoin issuers.

According to a recent report by the SCMP, the Hong Kong Monetary Authority have cautioned local investors against investing in stablecoins pegged to the Chinese yuan. The financial agency issued a reminder that it has yet to issue any stablecoin issuer licenses thus far, therefore investors should remain vigilant.

In a statement published on WeChat, the HKMA denied claims circulating on social media that there has already been a yuan-pegged stablecoin officially issued under the Stablecoin Ordinance from Hong Kong.

Just a week prior, the Hong Kong-based firm AnchorX launched an off-shore stablecoin pegged to the yuan. The token was dubbed AxCNH. Although the HKMA has yet to distribute any stablecoin issuer licenses, AnchorX claims it holds a valid stablecoin license from the Astana Financial Services Authority in Kazakhstan.

The stablecoin is intended to facilitate cross-border payments, specifically for offshore Chinese enterprises and countries involved in the Belt and Road Initiative. In addition, AnchorX also expressed that it planned to expand on use cases for AxCNH in digital-asset trading and real-world asset tokenization.

Hong Kong regulators have stated before that it is unlikely to grant stablecoin issuer licenses within this year.

Hong Kong’s stablecoin race: Who are the contenders for yuan stablecoins?

So far, there have been at least 77 institutions which have expressed interest in registering for a stablecoin issuer, as the stablecoin frenzy continues.

Many of the interested applicants include state-owned firms from China, such as China National Petroleum Corporation and the Bank of China. PetroChina in particular is eager to explore the use of stablecoins to facilitate cross-border settlements for oil and gas exports.

The surge in stablecoin interest has sparked a market boom in Hong Kong’s digital asset sector. Many RWA projects have begun to take flight and companies enjoyed a rise in stock prices after issuing announcements that it would pursue stablecoin ventures under the HKMA’s stablecoin framework.

The frenzy got to a point where the China Securities Regulatory Commission reportedly ordered local brokerages to halt tokenization activities in Hong Kong. According to a report , two brokerages were advised by the CSRC in recent weeks to stop conducting RWA activities offshore.

Not only that, earlier in August the Hong Kong Securities and Futures Commission recorded a rise in fraud risks related to digital assets after the Stablecoin Ordinance came into effect.