The issuance of the offshore Chinese yuan stablecoin AxCNH by AnchorX has recently attracted significant attention due to some self-media hype, leading many partners to mistakenly believe that the official release of the "coin" has occurred…
In fact, this is still just a practice of a private stablecoin, and the project was publicly announced back in July this year, so it is not a new development.
Today, the team will analyze the feasibility of issuing such experimental stablecoins and the potential legal risks, to help partners comprehensively assess entrepreneurial risks.
Let's first break down the basic parameters of the AxCNH coin:
Now, back to the key question: Is the AxCNH coin really "compliant"?
To discuss "compliance," we must clarify which country's or jurisdiction's regulations are being adhered to. According to the service agreement text published on AnchorX's official website, there is no detailed information about the issuing entity (country of origin, capital situation, shareholder structure, management team, etc.), only the name—AnchorX Group. However, based on the administrative license it obtained from Kazakhstan, it is highly likely that the entity is located within Kazakhstan or at least has a primary operating entity in that country.
Thus, the so-called "compliance" of the AxCNH coin primarily pertains to the regulations of Kazakhstan. It is well known that financial regulation generally has a "strong territoriality," meaning that a country's financial license does not have universal validity without international treaties or multilateral or bilateral agreements; it is only effective within that country's borders. Therefore, the compliance scope of the AxCNH coin is limited to Kazakhstan. If it wants to operate in places like Hong Kong or the European Union, it still needs to obtain local licenses or administrative permissions; otherwise, it will be considered illegal and may even incur criminal risks.
It is also important to note that, according to the team's investigation, the issuer of the AxCNH coin has confirmed in its public risk disclosure documents that this stablecoin has no government backing, is not a legal currency, and is not redeemable.
To conclude: There are legal risks.
As mentioned earlier, financial security is a crucial livelihood issue for every sovereign country. Undoubtedly, stablecoins can serve as an efficient and low-cost payment tool, helping users reduce transaction costs, but they also have the potential to challenge national currency issuance rights and can easily be used as tools for criminal activities.
Therefore, regulatory attitudes towards stablecoins in various countries are not as friendly as those towards market-cap cryptocurrencies like BTC and ETH. Only a few countries or jurisdictions allow compliant issuance and operation of stablecoin businesses domestically, but there is a necessary prerequisite—obtaining administrative permission from that jurisdiction first.
Taking Hong Kong as an example, according to Section 5 of the Hong Kong Stablecoin Ordinance, regulated stablecoin activities, as summarized by the team, mainly refer to:
(1) Issuing specified stablecoins or issuing Hong Kong dollar (whether fully or partially referenced) stablecoins in Hong Kong;
(2) Issuing stablecoins outside of Hong Kong but actively promoting them to the public in Hong Kong or conducting promotional activities in Hong Kong, which would constitute regulated stablecoin activities.
Therefore, if a partner obtains a license to issue stablecoins or engage in related businesses in a foreign country, it does not mean they can freely conduct issuance activities in other regions. This is clearly illustrated by the regulatory logic in Hong Kong. As stated in Section 5 of the Hong Kong Stablecoin Ordinance, even if a stablecoin is issued abroad, as long as it is actively promoted to the public in Hong Kong, it will constitute regulated activities and must comply with Hong Kong's regulatory requirements. Violating these regulations will result in severe penalties.
According to relevant regulations, anyone engaging in unauthorized regulated stablecoin activities or representing themselves as conducting such activities is committing a criminal offense. Upon conviction through a simplified procedure, they may face a maximum fine of $500,000 and imprisonment for 2 years. If it is a continuing offense, an additional fine of $10,000 will be imposed for each day of the offense; if convicted through public prosecution, the maximum penalty is a $5,000,000 fine and 7 years of imprisonment, with an additional fine of $100,000 for each day of the continuing offense. Similarly, if a licensed stablecoin issued abroad wants to target regions like Singapore or the European Union, it must also comply with local regulatory rules.
It is clear that while AxCNH holds a license from Kazakhstan's AFSA and meets certain regulatory requirements locally, this license is only valid within Kazakhstan and does not cover the regulatory rules of other countries or regions. If it wants to issue or promote to users in other regions, it will face legal responsibilities if it crosses local regulatory red lines regarding virtual assets, such as conducting related business activities within China, due to violations of China's prohibitions on virtual currency-related activities. This also confirms that a single foreign license cannot support the "borderless" widespread issuance of stablecoins; the differences in cross-regional compliance remain an unavoidable legal risk.
After achieving partial compliance in Kazakhstan, the impact of AxCNH on "Belt and Road" trade and economy is still under discussion. The team believes that while it may be difficult to create significant economic value in the short term, there is still some potential.
For friends in the crypto circle, the compliance of the AxCNH coin may briefly attract market attention. As a stablecoin pegged to the offshore yuan and holding an overseas license, it may pique the interest of some participants in the crypto space who pursue "compliance attributes." However, it is important to be cautious; as mentioned above, according to the document's content, AxCNH is essentially a private stablecoin and not an officially issued digital currency, and it clearly states that it "does not possess legal currency attributes and has no government backing," while also facing issues such as lack of transparency in reserve management information and cross-regional compliance risks. This means that friends in the crypto circle who participate must bear risks far exceeding those of traditional compliant financial products and cannot overlook the essential attributes of its virtual assets based solely on "compliance in a single country." The team reminds everyone to rationally assess risks before making decisions!
In summary, while AxCNH has achieved partial compliance in Kazakhstan, its compliance scope is limited, and there are legal risks in cross-regional promotion, along with insufficient disclosure of the issuing entity's information, which presents clear limitations for promoting "Belt and Road" trade and for participants in the crypto space. Its current development is constrained by multiple factors.
However, it should be noted that despite AxCNH's current influence not meeting expectations, its attempt at compliance as an offshore yuan stablecoin is still a step forward in industry exploration. Its subsequent trial in the "Belt and Road" initiative will also drive market attention and discussions regarding yuan stablecoins and cross-regional regulation, injecting new variables into the stablecoin sector and sparking discussions in the crypto asset community.
Related: The U.S. Commodity Futures Trading Commission (CFTC) is considering allowing stablecoins as collateral in the derivatives market.
Original text: “The First 'Yuan Stablecoin,' Is It Compliantly Issued?”
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