1. China is testing stablecoins with concerns about capital outflows.
China is seeking to introduce stablecoins as part of its efforts to internationalize its national currency (the renminbi) and challenge the dominance of the US dollar (Financial Times).
Legislation has been enacted in Hong Kong allowing licensed companies to issue digital tokens backed by traditional currency, but authorities are taking a cautious approach by limiting and gradually granting licenses, tightening controls to reduce risks of money laundering and capital flight (Financial Times).
It is expected that only one of four state-owned Chinese banks will obtain a license to issue these currencies in the future, as part of ensuring stability and control (Financial Times).
2. Hong Kong is a key testing ground for stablecoins.
Hong Kong serves as a testing ground for developing and launching digital currencies amid a strict ban imposed by China on cryptocurrencies in the mainland (Financial Times, Bitget).
The focus is on usage among institutions (B2B), rather than direct mass usage, in order to maintain regulatory control and limit risks (Financial Times).
In short: the landscape in China is moving towards the adoption of official digital wallets (stablecoins) but under strict constraints, with Hong Kong being the focal point for implementing this experiment.
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