Mainland China, one of the most restrictive global jurisdictions for cryptocurrencies, is reportedly showing signs of a shift in tone regarding stablecoins amid new developments in Shanghai.
The Shanghai State-owned Assets Supervision and Administration Commission (SASAC) has held a meeting to discuss strategic responses to stablecoins and digital currencies, Reuters reported on Friday.
Following the Thursday meeting, SASAC director He Qing called for “greater sensitivity to emerging technologies and enhanced research into digital currencies,” in a post on the authority’s official account.
The initiative reportedly came in response to growing calls from experts and major companies in China to develop a stablecoin pegged to the Chinese yuan.
China’s central bank weighing in on stablecoins
China’s central bank, the People’s Bank of China (PBOC), has been addressing the issue of global stablecoin adoption, particularly in light of US policy to strengthen the power of the dollar through stablecoins like Circle’s USDC (USDC).
In June, PBOC Governor Pan Gongsheng reportedly acknowledged the transformative potential of emerging technologies like stablecoins in global payment systems, intensifying calls for regulatory approval of yuan-backed stablecoins.
On June 23, China’s state media, Securities Times, published an article saying that the development of stablecoins “should be sooner rather than later.”
Related: JD.com, Ant Group push yuan stablecoins to challenge US dollar dominance
Subsequently, PBOC adviser Huang Yiping suggested exploring Hong Kong as a testing ground for yuan-backed stablecoins, stressing that mainland China’s tight capital controls make such experimentation unlikely.
“Hong Kong has an offshore market for the renminbi, and if the offshore market develops, it is possible to create a stablecoin pegged to the offshore RMB in Hong Kong in the future,” Huang reportedly said.
Is China among top BTC holders despite the ban?
Shanghai’s recent stablecoin developments come despite mainland China’s ongoing crypto trading bans, reinforced by a major crackdown in September 2021.
While some in the community have speculated that mainland China might eventually lift its crypto ban, others argue that the government is unlikely to ease its stance and expose its 1.4 billion citizens to such a high-risk industry.
In the meantime, multiple reports have suggested that China has been secretly stacking Bitcoin (BTC) to become the second-largest holder of the asset after the US. The Chinese government has never officially disclosed its Bitcoin holdings or any sale strategies.
FTX payouts in China add fuel to speculation
Beyond the rising calls for stablecoin adoption, speculation about China’s potential pivot toward crypto has intensified amid controversy over local payouts from the FTX bankruptcy estate.
In early July, the FTX estate requested that a US bankruptcy judge authorize a freeze on distributions to creditors in “potentially restricted foreign jurisdictions,” including China, which accounts for 82% of the value of the affected claims.
The move has triggered outrage in the community in many countries, with some Chinese creditors highlighting that China has never banned holding crypto.
On Tuesday, a Chinese creditor filed an objection to an FTX estate motion, representing a group of at least 300 creditors seeking to recover funds from the collapsed crypto exchange.
According to court filings, a ruling on the motion is expected on July 22.
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Source: https://cointelegraph.com/news/shanghai-mulls-stablecoin-despite-china-crypto-ban-report?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound