Alibaba’s international division is considering the introduction of an alibaba deposit token to expedite global payments amidst increased regulatory scrutiny over stablecoins in Beijing.
What is the alibaba deposit token plan?
Alibaba president Kuo Zhang revealed to CNBC in a recent report that the company is looking to leverage stablecoin-like technology to facilitate international transactions. The cross-border e-commerce unit intends to collaborate with banks on tokenized payments, as per CNBC. The concept of a deposit token involves a blockchain-based instrument representing a direct claim on commercial bank deposits, treated as a regulated liability of the issuing bank. While similar to stablecoins in function, the issuer of the deposit token is a bank rather than a cryptocurrency firm, potentially enabling quicker settlement for exporters.
Reports suggest that JPMorgan Chase, the world’s largest bank by market capitalization, has already introduced its own deposit token to institutional clients, highlighting the increasing interest in bank-issued tokens. However, Alibaba’s approach must align with China’s regulatory framework.
Why is China saying no to stablecoins?
Major Chinese tech companies, including Ant Group and JD.com, halted their plans to issue stablecoins in Hong Kong following regulatory concerns expressed by authorities in Beijing. This decision reflects a broader crackdown on stablecoins in China focused on control and risk mitigation, indicating that Chinese tech-driven stablecoins remain a sensitive topic within the country. Previous interest from companies like Ant Group and JD in Hong Kong’s stablecoin program or tokenized financial products has been put on hold, with reports suggesting restrictions on mainland firms’ involvement in cryptocurrency-related activities.
Chinese authorities have also instructed local companies to refrain from publishing research and hosting seminars on stablecoins, citing concerns over potential fraudulent use. The guidance reinforces a policy stance discouraging the development of a local stablecoin industry.
Offshore yuan stablecoins: what’s allowed?
In recent developments, Conflux announced the launch of a stablecoin backed by offshore Chinese yuan on its updated public network, targeting offshore Chinese entities and Belt and Road participants. Similarly, a regulated stablecoin linked to the international version of the Chinese yuan was introduced for foreign exchange markets, signaling China’s preference for controlled offshore experimentation in stablecoin initiatives.
What comes next for Alibaba and Hong Kong?
According to industry analysis, it is unlikely that Chinese stablecoins will be permitted for circulation within the mainland. However, bank-issued instruments could support compliant blockchain payments for exporters and SMEs operating internationally. Successful implementation will hinge on partnerships with banks and regulatory bodies in various jurisdictions, with coordination with institutions like JPMorgan Chase potentially aiding in aligning deposit token integrations with local regulations.
If approved, the alibaba deposit token could streamline cross-border settlements while adhering to China’s regulatory stance of restricting private stablecoins domestically and conducting limited experimentation offshore.