China Utilizes Confiscated Cryptocurrency for Sales in Hong Kong; Hong Kong Prepares Stablecoins for Belt & Road Infrastructure Projects
China Pushes Forward with Stablecoin Adoption for Belt and Road Initiative
China is exploring the use of stablecoins, pegged to the offshore yuan (CNH), to facilitate cross-border trade and settlements within the Belt and Road Initiative (BRI). This strategy aims to enhance liquidity, reduce transaction costs, and provide a regulated, reliable digital payment instrument that aligns with China's broader ambitions to internationalize the yuan and establish alternative payment infrastructures outside the dollar-based SWIFT system[1][2][3][4].
The Conflux Network, a Chinese public blockchain, is partnering with fintech company AnchorX and digital security provider Eastcompeace Technology to issue this offshore yuan stablecoin. The focus is on real-world asset applications and payment settlements within the over 150 countries participating in the BRI, with pilot projects particularly targeting Central and Southeast Asia[1][2].
In a move to support this strategy, Hong Kong has introduced a crypto regulatory framework called “LEAP,” effective from August 1, 2025. This framework includes a licensing regime overseen by the Securities and Futures Commission (SFC) specifically for stablecoin issuers. This regulatory environment aims to facilitate the development of real-world use cases, encouraging stablecoin projects tied to mainland China’s digital currency ambitions[1].
Hong Kong's role is significant, as it has attracted numerous stablecoin license applications from major players such as JD.com, Ant Group, and Circle, positioning it as a regional hub for regulated stablecoin issuance and innovation supporting China’s international payment strategies[1].
Meanwhile, China has developed a central bank digital currency (CBDC), the digital renminbi, for cross-border payments[5]. However, the preference for stablecoins over the digital renminbi in China's BRI strategy may be due to implementation speed[6]. Stablecoins can begin immediate operations under Hong Kong's new regulatory framework, while integrating new countries into mBridge, China's CBDC cross-border payment platform, requires technical and regulatory preparation[7].
In contrast to other jurisdictions like the United States, China's approach to disposing of confiscated cryptocurrencies is unique. Beijing's law enforcement division instructs the Beijing Equity Exchange (CBEX) to dispose of the confiscated cryptocurrencies, with Hong Kong's licensed cryptocurrency exchanges used to sell the digital assets[8].
As Hong Kong unveils comprehensive stablecoin regulations set to take effect in August[9], and the BSN Spartan Foundation, originally created in Singapore, maintains close ties to Hong Kong through Red Date[10], China continues to develop its digital currency strategy, fostering innovation and helping integrate its digital currency ambitions internationally.
| Aspect | Details | |--------------------------------|-----------------------------------------------------------------------------------------------------| | Stablecoin Type | Pegged to offshore yuan (CNH) | | Purpose | Cross-border payments and settlements among BRI countries | | Key Partners | Conflux Network, AnchorX, Eastcompeace Technology | | Target Regions | Asia, Africa, Europe (countries in BRI), pilot projects in Central and Southeast Asia | | China’s Strategic Goal | Internationalizing yuan, reducing reliance on dollar-based systems, enabling alternative payment rails | | Hong Kong’s Role | Crypto regulatory framework “LEAP” enabling licensed stablecoin issuance, overseen by SFC | | Market Impact | Encourages regulated stablecoin development, fosters innovation, helps integrate China’s digital currency strategy internationally | | Confiscated Cryptocurrency Disposal | Beijing's law enforcement division instructs the Beijing Equity Exchange (CBEX) to dispose of the confiscated cryptocurrencies, with Hong Kong's licensed cryptocurrency exchanges used to sell the digital assets[8] | | Regulatory Timeline | Hong Kong’s comprehensive stablecoin regulations set to take effect in August[9] | | BSN Spartan Foundation | Originally created in Singapore but has close ties to Hong Kong through Red Date[10] | | Digital Renminbi vs Stablecoins | Preference for stablecoins over the digital renminbi in China's BRI strategy may be due to implementation speed[6] |
- The Conflux Network, in partnership with AnchorX and Eastcompeace Technology, is issuing a stablecoin pegged to the offshore yuan (CNH), with a focus on real-world asset applications and payment settlements within BRI countries.
- Regulation plays a significant role in China's stablecoin projects, as Hong Kong has introduced acrypto regulatory framework called “LEAP,” encouraging stablecoin projects tied to mainland China’s digital currency ambitions.
- China's central bank digital currency, the digital renminbi, is designed for cross-border payments, but the preference for stablecoins over the digital renminbi in China's BRI strategy may be due to implementation speed.
- The Belt and Road Initiative is not limited to Asia, Africa, and Europe, as pilot projects particularly target Central and Southeast Asia for stablecoin adoption.
- The BSN Spartan Foundation, initially created in Singapore, maintains close ties to Hong Kong through Red Date, continuing China's digital currency strategy extension and fostering international integration.
- In China, confiscated cryptocurrencies are disposed of by the Beijing Equity Exchange (CBEX) under the guidance of Beijing's law enforcement division, with Hong Kong's licensed cryptocurrency exchanges used to sell the digital assets.
