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By 2021, China’s central bank warned that global stableecoins could bring risks and challenges to the “international monetary system, payment and clearing system, monetary policies, [and] cross -border capital power management. “This quote from People’s Bank of China’s White Paper on his E-CNY project reflected PBOC’s deep skepticism about digital currencies in the private sector, especially Facebook’s weight.
As it turns out, weight never launched. But stablecoins like Tether’s Usdt and Circle’s USDC are now deep inside the financial plumbing around the world, especially in Asia, making processes such as supply chain financing more effective than ever.
As a result, Peking’s caution at StableCeCoin gives a sense of urgent nature. They are on the agenda because they are seen as just another way the US dollar cemented itself in Asia’s economic pipelines, and that is not something the Chinese authorities are happy with.
Animoca Group president Evan Ayuang said in an interview with Coindesk that China’s interest in stablecoins has accelerated. It’s been like that for a while, but now it only rises when they go mainstream on Wall Street.
“Right now, stableecoin’s comeback is making decision makers and interested issuers. The question is why?” He told Coindesk. “It really has to do with the Trump Presidency … All signals that the US comes out and give out, they actually push China to act much faster.”
Animoca is a Hong Kong-based web3 fund that has its hands in all things crypto.
The pressure point, he claims, is the recently adopted genius law, which for the first time gives us federal legislative clarity on Fiat-supported stablecoins and cementing their role in the global financial system. Effectively, it could be seen as a digital enlargement of hegemony on dollar that China cannot afford to ignore.
Animoca has her own stableco -in interests. It is part of a consortium that includes standard chartered bank and Hong Kong Telecom, working on a Hong Kong Dollar (HKD) Endominated StableCecoin.
“When China looks at the genius law, the way they look at the United States is going for space,” Auyang said. ”And if [the] Dollar right now is the dominant reserve currency … It’s always about these regular stableecoins flowing in the financial system to settle currency in the light of merchant stresses and direct bilateral trade agreements. It matters. “
There is a clear contrast from the tone of PBOC’s White Book of 2021 that portrayed stablecoins as destabilizing and speculative, where they clumped them together with fleeting cryptocurrencies. But as Auyang noticed, the conversation has changed.
Beijing now sees the need to compete for blockchain rails, especially through regulated, offshore yuan (CNH) stableecoins, which can help make the country’s currency – Reminbi (RMB) or, in general, yuan – a more practical choice for offshore settlement.
“If you try to make RMB more internationalized, but in a controlled way it is. Offshore CNH is,” said Auyang. “This stableecoin is the way to internationalize what allows you to have the exchange control still in place but allows you to have offshore.”
A regulated stableecoin, be it HKD or CNH, can be connected to Chinese assets on land that can be put on public blockchains, creating new and important economic rails for the country. While E-CNY use cases have typically been about central banks and institutions. HKD or CNH stableecoin issued in Hong Kong or through public blockchain infrastructure offers a vehicle for internationalization of the currency while still respecting Peking’s capital control.
Another option may be liquidity pools in Hong Kong, providing places for HKD, CNH and E-CNY transactions to be run. Of course, he said, Beijing has an eye on HKD stableecoins, as the city with its autonomous legal framework is China’s sandbox.
“At one point it will be stableecoin,” he said, predicting that even international business-to-business payments will favor Tokenized Fiat over permitted central bank’s digital currencies (CBDCs).
And this shift is not limited to China.
“Everyone will do this after the United States adopts the genius action. Each country will think about this. Each country will have a regulated stablecoin at some point,” he said.
This is not about overturning the dollar, which is an impossible task considering the liquidity it has.
“When I trade with my partners in Southeast Asia, there is deep enough liquidity out there in the non-USD stablecoin couple for this trade to happen,” he said.
PBOC’s White Paper from 2021 framed stableecoins as threats. Four years later, Beijing seems to warm up to the idea that they have a role to play in the financial order of the future.
Market movements
BTC: Bitcoin is consolidated about $ 118,000 after last week’s $ 123,000 all the time high, with analysts warning of a potential dip for $ 115,000 in the middle of fragile mood, profits and less bearish signals, although onchain data suggests that the ups can soon resume.
ETH: ETH remains in a strong rende over key moving average, trading in $ 3,619 after a rally pushing prices near $ 3,800, with $ 3,300 now acting as key support to maintain the bullish structure.
Gold: Gold prices fell 0.6% to $ 3,410.26 on Wednesday when a trade agreement in USA-Japan relieved the fear of trade wars and muted demand for a safe haven, although there is a longer term support back from de-dollarization and central bank’s purchase.
Nikkei 225: Nikkei 225 rose 1.09% on Thursday and expanded gains such as optimism over trade agreements with the United States and potential progress with the EU markets Asia-Stockhavet.
S&P 500: US shares rose solidly on Wednesday-driven by optimism over trading in USA-Japan-with dow up over 1%, S&P 500 wins more than 0.75%, and Nasdaq adds approx. 0.6%.
Elsewhere in crypto:
- Tether CEO: US Market Entry ‘Well Iway’ in the middle of Plans for Institutional StableCoin (The Block)
- Some tokenization are just ‘games’, says Prometheum Co-Ceo (Decrypt)
- The market has become ‘overly excited’ for stableecoins, says Hong Kong Financial Regulator (Coindesk)
