Alibaba’s global e-commerce arm is reportedly developing a bank-backed deposit token for cross-border payments as Beijing tightens its crackdown on stablecoins.
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The cross-border e-commerce arm of Chinese tech behemoth Alibaba is working on a deposit token amid mainland China’s crackdown on stablecoins, according to CNBC.
Alibaba president Kuo Zhang told CNBC in a Friday that the tech giant plans to use stablecoin-like technology to streamline overseas transactions. The model under consideration is a deposit token, which is a blockchain-based instrument that represents a direct claim on commercial bank deposits and is treated as a regulated liability of the issuing bank.
, which these tokens closely resemble, are issued by a private entity and backed by assets to maintain their value. The report follows JPMorgan Chase — the world’s biggest bank by market capitalization — reportedly earlier this week.
The news also follows reports that Chinese technology giants, including Ant Group and JD.com, suspended plans to issue after regulators in . The report was just the latest of many suggesting that mainland Chinese authorities appear dead set on preventing a stablecoin industry from arising in the country.
China says no to stablecoins
In July, both Ant Group and JD in participating in Hong Kong’s pilot stablecoin program or launching tokenized financial products, such as digital bonds. Similarly, HSBC and the world’s largest bank by total assets — the Industrial and Commercial Bank of China — were in early September.
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Later in September, a now-removed report by Chinese financial outlet Caixin claimed that Chinese firms operating in may be forced to withdraw from cryptocurrency-related activities. According to the report, policymakers would also impose restrictions on mainland companies’ investments in crypto and cryptocurrency exchanges.
In early August, Chinese authorities reportedly instructed local firms to , citing concerns that stablecoins could be exploited as a tool for fraudulent activities. Still, China is not entirely devoid of stablecoin ties.
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Offshore yuan stablecoins, not mainland money
In late July, Chinese blockchain Conflux announced a third version of its public network and introduced a new . Still, the stablecoin aims to serve offshore Chinese entities and countries involved in China’s Belt and Road Initiative, not the mainland.
In late September, a regulated stablecoin yuan launched. Still, this product was also intended for foreign exchange markets and was launched at the Belt and Road Summit in Hong Kong, signalling a similar target market.
A recent analysis suggested that we should not expect to circulate in the mainland. Joshua Chu, co-chair of the Hong Kong Web3 Association, said, “China is unlikely to issue stablecoins onshore.”
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