As financial authorities around the world become increasingly concerned with the regulation of stablecoins, a Chinese jurisdiction prepares to pilot a new yuan-linked stablecoin for international trade.
Chris Banbury, head of global operations for the Conflux unlicensed blockchain project, told TBEN on September 21 that the company will provide its technology to launch an offshore renminbi (RMB) stable currency tied to the Chinese central bank’s digital currency ( CBDC), the digital yuan.
“This is going to be pegged to the price of the digital yuan only without formal integration,” Banbury noted, adding that the project would explore how the token trades against other currencies.
The new stablecoin project will facilitate international trade in the Lin-gang special zone in Shanghai after the Chinese government granted the free economic zone permission to explore free trade with an offshore RMB stablecoin in July.
“Although the offshore RMB stablecoin use case has been approved by the governments of China and Shanghai, the pilot program is not endorsed by or linked to the government,” Banbury noted.
Unlike popular stablecoins like Tether (USDT) and USD Coin (USDC), the next offshore RMB stablecoin will not be a private stablecoin because it is fully decentralized, Banbury said. The executive stated that the new stablecoin is called the “offshore RMB stablecoin” because its functionality will be limited to global trade:
“The term ‘offshore’ refers to the use of the RMB for international business purposes, not for domestic business purposes. The digital yuan is used exclusively for domestic purposes. As such, the offshore RMB is not an “offshore yuan”. The digital yuan is for domestic use supervised by the People’s Bank of China. “
Related: Chinese banks explore e-yuan to sell investment funds and insurance
According to Banbury, the offshore RMB stablecoin is owned by the Shanghai ShuTu Blockchain Research Institute, a branch of the Conflux Tree-Graph Institute for blockchain research and development. The stablecoin has yet to receive a dedicated ticker as the development team is still figuring out when to launch, he added.
One of the first nations in the world to launch a CBDC, China continued to crack down on cryptocurrency trading and mining, with local authorities shutting down several mining farms and suspending crypto trading transactions this year. .