China's Stablecoin Race: Conflux vs. Chainmaker
China is carefully evaluating stablecoin technologies, leveraging Hong Kong as a testbed for digital currency advancements. Financial regulators are actively debating stablecoin strategies, emphasizing alignment with national priorities and addressing capital control concerns.
China's Cautious Stablecoin Approach
Recent discussions between Chinese financial regulators and cryptocurrency experts, as reported by the Financial Times, centered on stablecoin trends and implementation. A key takeaway was the necessity for stablecoin projects to adhere to China's specific national conditions. Central bankers have repeatedly voiced concerns regarding potential capital outflow risks associated with stablecoins.
Hong Kong is emerging as a cryptocurrency testing ground following mainland trading bans. The territory has enacted legislation to permit licensed businesses to issue fiat-backed stablecoins. However, the HKMA intends to grant a limited number of licenses starting next year, potentially including only one of China's four major state banks initially.
While Central Bank governor Pan Gongsheng acknowledged the impact of stablecoins on traditional payment systems, Chinese policymakers are wary of dollar-backed tokens reinforcing US currency dominance. Conversely, Chinese state-owned enterprises are demonstrating increasing interest in stablecoin applications for payments and settlements.
Several state-owned companies with operations in Hong Kong are seeking stablecoin licenses, and the authority remains open to approving offshore renminbi-backed stablecoins.
Conflux and Chainmaker: Potential Frontrunners
The realization of a Chinese stablecoin hinges significantly on the capabilities of the underlying blockchain infrastructure.
According to "Frank," an analyst at PANews, Conflux is a leading candidate for China's stablecoin infrastructure. Conflux operates as China's only regulated public blockchain with native CFX tokens. This unique status could offer crucial advantages for stablecoin development.
Frank also points out that ChainMaker boasts enterprise-grade infrastructure and substantial policy support from Beijing. The platform attracts major state-owned enterprises and features in government planning documents. However, its consortium chain structure might limit its applicability to international stablecoin initiatives.
BSN and Xinghuo represent China's permissioned blockchain approach, operating without native tokens. Their industrial focus effectively serves domestic needs. However, their tokenless architecture might restrict stablecoin compatibility compared to Conflux's public chain characteristics.
The analyst concludes that Conflux's alignment with international standards positions it favorably for China's stablecoin ambitions.