China appears to be weighing the launch of the original support stubcoin, a surprising change after years of cracking down on crypto while promoting digital Yuan, the central bank's digital currency, in its first rollout in Hong Kong and Shanghai.
In the latest episode of BYTE sized insight, Cointe Legraph spoke with two leaders. We analyzed the potential movements towards China's Stablecoins. Martin Chorzempa is Patrick Tan, Senior Fellow at Peterson Institute for International Economics and CEO of blockchain intelligence company Chainargos.
Stablecoin Race China
The news, first reported on Wednesday, underscored Beijing's ambitions to strengthen its original role in international finance. Still, experts say the path forward is not certain, especially with the track record of the digital yuan, the central bank's digital currency (CBDC).
According to Chorzempa, the domination of Alipay and Wechat payments in daily transactions leaves little room for China's CBDC experiments.
This leaves the original stubcoin with a different potential role. “We tend to think that perhaps the most interesting application of Yuan Stablecoin will be cross-border payments,” says Chorzempa.
“One of the most interesting things about Renminbi Stablecoins floating around is that this allows people to get their money in a way that doesn't go through the bank.”
Related: Chinese Merchant Bank Subsidiary launches crypto exchanges in Hong Kong
Yet, cross-border utilities do not erase the reliability gap between the original and the US dollar. Chorzempa said:
“China is a famous anti-crypto. The interesting thing about this stubcoin idea is, OK, you have what you call a stubcoin.
“And if the answer is 'yes', he said, 'It probably isn't that appealing compared to something on USD.
Challenging Dollar Domination
From a market perspective, the hurdles are just as steep. “98% of all stubcoin and stubcoin transactions are dollar-based,” Tan said.
“The world's largest cryptocurrency exchanges, Binance, Okex, Bybit, they are all linked to Chinese people, and what currency is your choice in all of these exchanges? It's always a dollar-backed Stablecoin.”
For Tan, the real problem is systematic. “If China wants to make the digital yuan attractive, it needs to make the yuan attractive. And to make the yuan attractive, I think it's very challenging given the current climate of China.”
Whether the Chinese stubcoin push will be successful or stalled, it clearly shows one thing. Stubcoins are no longer cryptographic piping. They became tools for large geopolitical contests of future money.
For a complete interview with Cointelegraph's podcast page, Apple Podcasts and Spotify, listen to the complete episode of Byte Size Insights. And don't forget to check out the full lineup of other shows on Cointelegraph!
magazine: Japan and China Stubcoin, India changes crypto tax: Asia Express
