A Shanghai regulator said it held a meeting this week for local government officials to consider strategic responses to stablecoins and digital currencies – a marked shift in tone for China where crypto trading is banned.
The Thursday meeting was organized 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.
We need to have “greater sensitivity to emerging technologies and enhanced research into digital currencies,” He Qing, the regulator’s director told the meeting according to a post on the body’s official WeChat account.
Shanghai is China’s main international financial hub and often leads pilot programs 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 U.S., where the legal framework is more developed, more and more companies such as Amazon and Walmart are looking at launching stablecoins.
In China, e-commerce firm JD.com and fintech giant Ant Group are urging the central bank to authorize yuan-based stablecoins to counter the growing sway of U.S. dollar-linked cryptocurrencies, sources have said.
The companies plan to apply for stablecoin licenses 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 analyzed 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.
In addition to stablecoins, other digital currencies have also been gaining in popularity, with bitcoin climbing to an all-time high near $112,000 this week.
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.
