On August 1, 2025, Hong Kong's "Stablecoin Regulation" officially came into effect, marking a key step for this international financial center towards Web3 and attracting global attention. However, just as the market anticipated tech giants to make significant moves, a major announcement pressed the "emergency brake" on Hong Kong's Web3 gold rush: several Chinese tech giants, including Ant Group and JD.com, have suspended their stablecoin projects in Hong Kong. This sudden change is not merely a business decision but stems from direct instructions from mainland regulatory bodies such as the People's Bank of China and the National Internet Information Office. This event not only reveals Beijing's deep concerns about the rise of private sector control over currency but also brings the core financial issue of "monetary sovereignty" to the forefront, indicating that the development of Web3 globally, especially in the context of China, must confront the highest considerations of national financial security and monetary sovereignty.

I. From "Rapid Advancement" to "Emergency Halt": The Stablecoin Journey of Tech Giants in Hong Kong

Hong Kong reviewed and passed the "Hong Kong Stablecoin Regulation Draft" in May 2025, which officially came into effect on August 1, marking its entry into the "licensed operation" era of stablecoins. Subsequently, the Hong Kong Monetary Authority launched a "sandbox" arrangement for stablecoin issuers in March 2024, attracting the first batch of institutions, including JD Coin Chain Technology. By the end of September, Hong Kong had received stablecoin license applications from 36 institutions, with unprecedented market enthusiasm.

The initial ambitions of the giants: Ant Group's Ant International and Ant Digital Technology actively expressed their intention to participate in the pilot program and apply for licenses, executing a "dual-line layout." JD Group's Chairman Liu Qiangdong also publicly stated his hope to reduce global cross-border payment costs by 90% through stablecoins, improving efficiency to the second level, placing high expectations on stablecoins. These statements demonstrate the immense enthusiasm and strategic planning of Chinese tech giants for the Hong Kong stablecoin market.

The sudden "emergency brake": However, the Financial Times recently disclosed that Ant Group, JD.com, and other Chinese tech companies have suddenly suspended their plans to issue stablecoins in Hong Kong. According to insiders, this suspension was not voluntary but was prompted by a "postponement" directive from the People's Bank of China and the Cyberspace Administration. This factual turn undoubtedly dropped a heavy bomb on the thriving Hong Kong Web3 ecosystem.

II. Beijing's "Monetary Sovereignty" Red Line: The Priority of National Financial Security

Why would mainland regulatory bodies choose to halt at this juncture when the regulatory environment in Hong Kong is already clear and companies are actively responding? Behind this lies a deeper, "sovereignty first" principle concerning national financial security.

The absolute authority of monetary sovereignty: In the underlying logic of China's financial system, currency creation has always been a core component of national sovereignty, and the right to issue currency is regarded as an absolute authority that cannot be challenged in any form. Former central bank governor Zhou Xiaochuan pointed out in a recent internal seminar that private stablecoins essentially represent a form of "digital seigniorage" that allows private entities to capture monetary issuance revenues that should belong to the state.

Capital controls and "risk spillover": The core value of stablecoins lies in their near-zero friction and low-cost cross-border circulation capabilities globally. Mainland regulators are concerned that if Chinese giants like Ant and JD issue stablecoins in Hong Kong, they could become new channels for mainland funds to bypass existing capital controls under the guise of "compliance innovation," leading to "uncontrollable factors" that threaten the stability of the national financial system.

Strategic priority of the digital yuan (e-CNY): The People's Bank of China is vigorously promoting the research and application of the digital yuan (DCEP), which has become a national strategy. If Chinese giants issue stablecoins pegged to the Hong Kong dollar or other fiat currencies offshore, their widespread commercial application could potentially conflict with the strategic goals of DCEP or dilute the mainland's dominance over the digital currency system. In the competition for "digital financial sovereignty," any large-scale payment tool without sovereign backing will be treated with caution.

New "shadow banking" risks: Stablecoins issued by tech giants could form a new type of "shadow banking" system, circumventing existing prudential regulatory indicators and creating credit expansion that regulators cannot cover. Simulations by the central bank's Financial Stability Bureau indicate that if private stablecoins are not restricted, they could lead to an "off-balance-sheet" fund scale of trillions within three years, severely disrupting the transmission of monetary policy.

The requirement for "penetrating regulation": Although Hong Kong has an independent financial regulatory system, for tech giants whose business entities, funding sources, and systemic risks are closely linked to the mainland, mainland regulatory bodies have the authority and necessity to implement "penetrating regulation" to ensure that their innovation speed and direction in Hong Kong ultimately align with the highest requirements for macro financial security from the mainland.

III. The "Touchstone" of Hong Kong's Web3 Ecosystem: Opportunities and Challenges Coexist

The suspension by Ant and JD has brought immediate and far-reaching impacts on the Web3 industry in Hong Kong and globally.

Re-shuffling of the Hong Kong stablecoin ecosystem: The exit of Ant and JD undoubtedly creates a certain "vacuum" in the Hong Kong stablecoin ecosystem, especially for Web3 projects hoping to leverage the ecosystems of mainland tech giants for applications. In the early stages of stablecoin licensing, it is likely that international financial institutions, traditional banks, or institutions with strong offshore backgrounds will take the lead. Institutions with Chinese backgrounds will adopt a conservative strategy of waiting for a clearer framework.

The "tug-of-war" between regulation and innovation enters a new phase: This event has become a classic case of the "tug-of-war" between regulation and innovation in the Web3 industry. It clearly defines that in East Asia, any financial innovation involving cross-border capital flows and fiat currency pegs will be dominated by regulatory prudence. For other institutions, this serves as a signal: the threshold for issuing stablecoins is not only the high standards set by the Hong Kong Monetary Authority but must also pass the mainland's higher scrutiny regarding "financial security."

Strategic adjustments by Web3 giants: For Ant and JD, this seems more like a "strategic pause" rather than a termination. They will not abandon the enormous potential of global cross-border payments represented by stablecoins. The giants will use this time to redesign offshore stablecoin issuance plans that better align with mainland regulatory spirit and incorporate risk isolation mechanisms, or shift their focus to digital asset applications that do not involve fiat currency pegs or circulate entirely within closed offshore systems.

IV. The Sovereignty Contest in the Era of Digital Currency: China's Strategic Choice

Globally, competition in the field of digital currency has risen to a new dimension of financial competition between nations. China's response strategy is to concentrate efforts on developing the digital yuan rather than dispersing resources across multiple private stablecoins.

The state-led path: A research report from the central bank's International Department warns that allowing Chinese tech companies to issue cross-border stablecoins could trigger international risks such as regulatory arbitrage, currency substitution leading to backlash from other countries, and cross-border spillover causing systemic risk contagion. China's choice is to strengthen the state-led digital currency path, ensuring the integrity of monetary sovereignty in the digital economy era.

Consumer protection and financial compliance: Although the stablecoin proposals put forth by Ant and JD promise 100% reserves, regulators still have concerns about the fund custody and redemption mechanisms of private institutions. In contrast, the digital yuan has designed a mechanism of "small anonymous, large traceable," which better meets regulatory requirements for risk balance.

Conclusion:

The suspension of stablecoin plans by Ant, JD, and other Chinese tech giants is an "initiation ceremony" that the Web3 industry must inevitably undergo as it enters the mainstream financial system. It reveals that when promoting financial technology innovation, the bottom line of national financial security cannot be crossed. In Beijing's decision-making logic, currency is not merely an economic tool but a symbol of national sovereignty and a reflection of governance capability. In the era of the digital economy, this fundamental logic has not been weakened; rather, it has been further strengthened by technological changes. The true development of the Hong Kong Web3 market in the future will depend on whether all participants can find that delicate and robust "balance point" between this red line and the demand for innovation. This tug-of-war has only just begun.

Related Reading: Did China intervene? Exclusive insights from British media: Ant Group and JD suspend Hong Kong stablecoin plans

Original article: “Ant Group and JD Halt Their Hong Kong Stablecoin Plans: What’s the Logic Behind the Sudden Brake?”

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