<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>If some of the less trustworthy corners of the internet were to be believed, China took a fairly drastic step against cryptocurrencies last weekend by banning them.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>As it turns out, that was fake – or at the very least old – news; Beijing did put a ban on trading and mining crypto, but that was handed down on September 24, 2021, a lazy 1409 days earlier.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>But if you zoomed out just slightly from the Chinese mainland, then there was a genuine development.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/finance/gst-raise-proposal-kate-chaney/0dac5b2c-c253-4115-bd46-e3482986816e"><strong><span>New GST proposal would give everyone $3300 a year. But there's a catch</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>On August 1, new regulations in Hong Kong came into effect, allowing companies to apply for a licence to issue stablecoins.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Unlike more typical cryptocurrencies like Bitcoin, whose value fluctuates wildly, the value of stablecoins is pegged to that of currencies or commodities, removing the volatility that deters some investors.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>They don't just account for pocket change, either.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/finance/hong-kong-stablecoin-regulations-china-cryptocurrency/dbb8d467-f23b-44e1-90a3-2a87dd2ccc5b" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>According to ANZ, stablecoin transactions were worth $US27.6 trillion ($42.5 trillion) last year alone.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>That's more than all transactions made using Visa and Mastercard combined, and about 15 times the value of the entire Australian economy.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Hong Kong isn't the only jurisdiction to regulate stablecoins recently. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>US President Donald Trump signed the GENIUS Act (officially the Guiding and Establishing National Innovation for US Stablecoins Act) on July 18, one of three major bills to clear the House during what was touted as "crypto week".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/world/chikungunya-what-is-the-virus-now-spreading-in-southern-china-explainer/f559f574-f2b8-4bc7-8f5f-8bee35bc9dd4"><strong><span>What you need to know about chikungunya, the virus now spreading in China</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The regulations in the US and Hong Kong have attracted significant market attention," ANZ chief greater China economist Raymond Yeung wrote.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Companies involved in issuing and trading stablecoins have seen their stock prices rally massively."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>In Australia, meanwhile, the RBA has ruled out the idea of a central bank digital currency for now, but announced the start of a trial of tokenised currencies, including stablecoins, in July.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Not that everyone thinks they're a good idea.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Law professor and prominent crypto critic Hilary Allen compared the GENIUS Act to the pre-regulated financial era that led to the Great Depression.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/rba-interchange-fee-cap-proposed-how-this-could-impact-credit-card-perks-reward-points/2eb51926-15ae-4f3b-831f-1cef804272b5"><strong><span>Aussies can breathe sigh of relief after $900 million credit card warning</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It won't just be crypto taking advantage, it'll be everybody," Allen told CNN last month.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"And then we get to unregulated markets for all kinds of investments, which is where we were in the 1920s, and we saw how that ended."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The Hong Kong regulations come as some Chinese tech giants, including e-commerce behemoth JD.com and the Alibaba-linked Ant Group, have reportedly pushed Beijing to allow stablecoins linked to the yuan to counter the surge of US dollar-backed crypto.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>More than a few commentators and analysts have talked of Hong Kong acting as a testing ground for the mainland.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The emergence of stablecoins in the 2020s gave hope to the internationalisation of the (yuan), and the passing of Hong Kong's stablecoins ordinance was viewed as a further step in that direction," Yeung said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>At the same time, it's no secret China wants to get away from the reliance on the US dollar in international transactions, and promote the yuan in its place.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>So could a yuan-backed stablecoin offer a way to do just that?</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/dogs-in-cars-australia-laws-road-rules-for-pet-owners-explained/eb2c1824-2937-4265-b415-64b1eb56935e"><strong><span>Where your dog sits in the car could cost you thousands in fines</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>According to Yeung, even if Beijing does allow them, a stablecoin on its own won't drive dedollarisation – it'll come down to a host of other factors.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Some observers think it could help," he wrote.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"But it's likely any currency diversification will depend on the popularity of the yuan, rather than any one technology…</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Should China want to allocate less foreign reserve to $US, then stablecoins backed by other currencies are the alternative, not the yuan-backed stablecoin.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The issuance of yuan-backed stablecoin requires sufficient high-quality liquid assets. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"This could be limited by the issuers' access to renminbi deposits, offshore China sovereign and sub-sovereign bonds and their access to the onshore bond market. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Stablecoin issuance, and their reserve funds, will increase demand for these assets.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"But ultimately, the success of renminbi internationalisation will drive yuan-backed stablecoins — not the other way round."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><span>– with CNN</span></em></div></div>