On 6 February, the People’s Bank of China, the China Securities Regulatory Commission and six other regulators published a statement regarding RWA tokenization and the issuance of RMB stablecoins. They reiterated that these activities are illegal on the mainland. However, the statement left the door open to offshore tokenization activities provided a company has approval from its local regulators.
Regarding the formal rationale for the domestic stablecoin ban, the authorities cited a lack of customer identification and anti-money laundering compliance. Additionally, stablecoins lack borders for usage, which conflicts with China’s strong controls. Thirdly, they stated it is a threat to monetary sovereignty.
“Without the consent of the relevant departments in accordance with the law and regulations, no unit or individual at home or abroad may issue a stablecoin pegged to the RMB abroad.” If Hong Kong authorities give consent and coordinate with the mainland, it might be possible. Hong Kong has developed a stablecoin regulatory framework and plans to issue the initial licenses in March. Notably, the first iteration of Hong Kong stablecoins will require every stablecoin holder to be identified at all times. While unusual, this can be seen as an initial measure while regulators become more comfortable before relaxing this requirement. However, this requirement might never be dropped for RMB stablecoins.
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