The CBDC quest has continued soaring as many countries move to launch it. According to a CBDC tracker, Atlantic Council, 130 countries are exploring CBDC, while 19 countries out of the G20 are in an advanced stage. But while these countries are still in the process, 11 countries have fully launched it, of which China is one.
China started its CBDC test in April 2020 and the government first concentrated on 4 cities, Chengdu, Shenzhen, Suzhou, and Xiongan. Later, the digital yuan trial program expanded to other cities and even spread to the top 5 largest regions.
Since then, the CBDC, e-yuan, or e-CNY has seen impressive adoption following China’s efforts to push it. But recently, Circle CEO said China needs a Yuan-backed stablecoin more than a central bank digital currency.
Yuan-backed Stablecoins Are Better Than CBDC To Fasten China’s Currency Globalization, Jeremy Allaire
Circle is the crypto firm behind the USDC stablecoin pegged to the United States dollar. And the company’s CEO, Jeremy Allaire, had an interview with the South China Morning Post where he suggested a stablecoin instead of CBDC for China.
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During the interview, Allaire said, “If eventually, the Chinese government wants to see the RMB used more freely in trade and commerce around the world, it may be that stablecoins are the path to do that more than the central bank digital currency.”
According to Allaire, using a stablecoin pegged to China’s offshore Yuan (CNH) will increase the use of the currency in commerce and trading worldwide. Allaire also noted that mainland China might be skeptical about embracing the crypto industry in its entirety, which will make his suggestions difficult to implement.
Regarding the full adoption of digital assets in Hong Kong, Allaire said, “The reality is that every other major financial market in the world is also embracing digital assets, and the biggest financial institutions in the world are embracing digital assets. So for Hong Kong to be relevant, it has to.”
Allaire also spoke on how stablecoins will fare when many countries launch a central bank digital currency. The CEO stated that private stablecoins drive innovations while CBDCs are simply complementary.
“If central banks are going to upgrade their own systems to move away from legacy technology into more modern distributed ledger technology, that’s great,” Allaire added.
Hong Kong Plans to Regulate Stablecoins
Circle CEO also pointed to Hong Kong regulators’ efforts to regulate the Stablecoin sector. Furthermore, the Hong Kong Monetary Authority (HKMA) has already kick-started its plans to roll out stablecoin regulation by 2024.
Also, during the China Conference: Hong Kong forum, the Secretary for Financial Services and the Treasury, Christopher Hui Ching-yu, reiterated the commitment to roll out the regulation.
According to an SCMP report, the Hong Kong Securities and Futures Commission has also started to develop a complementary regulatory framework for stablecoins.
Finally, there’s hope for Web3 development in the Hong KonChinese special administrative region. Notably, the Hong Kong government announced a task force on June 30 to provide recommendations on launching into the Web3 sector.