Categories: Blockchain

New decentralized stablecoin in China targets international trade

With financial authorities around the world growing concerns about stablecoin regulation, a jurisdiction in China is preparing to test a new yuan-linked stablecoin for international trade.

Chris Banbury, global leader of the license-free blockchain project Conflux, told Cointelegraph on Sept. 21 that the company will provide its technology to introduce a single yuan (RMB) stablecoin.

“This is just tied to the digital yuan without any formal integration,” noted Banbury, adding that the project will look into how the token is traded with other currencies.

The new stablecoin project will facilitate international trade in Shanghai’s Lin Gang Special Zone after the Chinese government granted a Free Economic Zone license in July to explore the free trade of human stablecoins overseas.

Banbury noted, “Although the use case for the offshore renminbi stablecoin has been approved by the governments of China and Shanghai, the pilot program is not endorsed or affiliated with the government.

Unlike popular stablecoins like Tether (USDT) and USD Coin (USDC), the upcoming offshore yuan stablecoin will not be a private stablecoin as it is completely decentralized, Banbury said. The CEO said the new stablecoin will be named “outside of the RMB stablecoin” as its functionality is limited to global trading:

“The term ‘overseas’ refers to the use of the renminbi for international transactions – not domestic transactions. The digital yuan is used for domestic purposes only. Therefore, overseas yuan is not “overseas yuan”. A domestic digital yuan monitored by the People’s Bank of China.

Related: Chinese banks are trying out the digital yuan to sell mutual funds and insurance

Banbury said foreign yuan stablecoins are held through the Shanghai ShuTu Blockchain Research Institute, a branch of the Conflux Tree Graph Institute for blockchain research and development. He added that the stablecoin hasn’t received a special ticker yet as the development team is still setting a start date.

As one of the first countries in the world to adopt a CBDC, China continued to crack down on the mining and trading of cryptocurrencies, with local authorities closing many mining farms and ceasing cryptocurrency trading this year.

Annie

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