Alibaba’s cross-border division is considering Alibaba Deposit Tokens to speed up international payments as the Chinese government tightens control over stablecoins.
What is Alibaba Deposit Token Plan?
alibaba president Kuo Chan The company aims to use technology like stablecoins to facilitate overseas transactions, the company told CNBC in a report on Friday. The cross-border e-commerce division will work with banks on tokenized payments, CNBC reports. However, its design differs from privately issued crypto stablecoins.
Deposit tokens are blockchain-based instruments that represent direct claims on commercial bank deposits and are treated as regulated debt of the issuing bank. Additionally, this deposit token model is described as mirroring a stablecoin in practicality, although its issuer is a bank rather than a crypto company. However, it could enable faster payments for exporters.
JP Morgan Chase The world’s largest bank by market capitalization reportedly opened its deposit token to institutional investors earlier this week. This development highlights the growing interest in bank-issued tokens. However, Alibaba’s approach needs to be consistent with China’s policy stance.
Why is China saying no to stablecoins?
Including Chinese tech giants ant group and JD.comhas suspended its plans to issue a stablecoin in Hong Kong after regulators in Beijing expressed displeasure. The move reflects China’s growing crackdown on stablecoins, which prioritizes control and risk prevention. Moreover, this shows that Chinese high-tech stablecoins remain a sensitive topic on the mainland.
Both in July ant group and J.D. It has expressed interest in participating in Hong Kong’s experimental stablecoin program and launching tokenized financial products such as digital bonds. Similarly, HSBC It is also the world’s largest bank in terms of total assets. Industrial and Commercial Bank of China — was reported to have shared these Hong Kong stablecoin ambitions in early September. But then sentiment changed quickly.
In late September, a now-deleted report by a Chinese financial institution Caixin He claimed that Chinese companies operating in Hong Kong may be forced to withdraw from crypto-related activities. Policymakers also plan to restrict mainland companies’ investments in cryptocurrencies and exchanges, according to the report. Check out this in-depth coverage of the Caixin report by Cointelegraph analysis. That said, authorities continued to emphasize financial stability.
Chinese authorities have reportedly told domestic companies to stop publishing research and holding seminars related to stablecoins, citing concerns that stablecoins could be used for fraud. Additionally, the guidance reinforced policy directions that discourage the emergence of a local stablecoin industry.
Offshore RMB stablecoins: what is allowed?
Late July, confused announced the third version of its public network and introduced a new offshore Chinese yuan-backed stablecoin. Still, offshore RMB stablecoins are targeted at offshore Chinese companies and Belt and Road participants, not the mainland. For more background on the upgrade, see the Conflux 3.0 announcement. However, usage is still concentrated in cross-border settings.
In late September, a regulated stablecoin tied to the international version of the Chinese yuan was launched. Still, it is aimed at the foreign exchange market and debuted at the Belt and Road Summit in Hong Kong, suggesting a similar target market. Moreover, these moves indicate China’s preference for controlled ocean experiments.
What’s next for Alibaba and Hong Kong?
Recent analysis suggested that Chinese stablecoins should not be expected to circulate on the mainland. joshua chu“It is unlikely that China will issue stablecoins domestically,” said the co-chairman of the Hong Kong Web3 Association. However, bank-issued instruments may continue to support compliant Alibaba blockchain payments for exporters and small and medium-sized enterprises operating across borders.
However, success will depend on banking partners and regulators in Hong Kong and other jurisdictions. Furthermore, collaboration with JPMorgan Chase and similar institutions could potentially align the integration of JPMorgan deposit tokens with local rules. Implementation details determine timing and scope.
If approved, the Alibaba deposit token would streamline cross-border payments, while also fitting in with China’s position of having no domestic private stablecoins and limiting overseas experimentation.
