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Conflux will provide the technology to launch an offshore RMB stablecoin pegged to Chinaâs CBDC, the digital yuan.
As financial authorities around the globe become increasingly concerned about stablecoin regulation, a jurisdiction in China is preparing to pilot a new yuan-pegged stablecoin for international trade.
Chris Banbury, head of global operations at permissionless blockchain project Conflux, told Cointelegraph on Sept. 21 that the firm will provide its technology to launch an offshore renminbi (RMB) stablecoin pegged to Chinaâs central bank digital currency (CBDC), the digital yuan.
âThis is going to be pegged to the digital yuan in price only with no formal integration,â Banbury noted, adding that the project will be exploring how the token trades against other currencies.
The new stablecoin project will facilitate international trade in Shanghaiâs Lin-gang Special Area after the Chinese government granted the free economic zone permission to explore free trade with an offshore RMB stablecoin in July.
âWhile the use case for the offshore RMB stablecoin has been approved by the government of China and Shanghai, the pilot program is not endorsed by or connected with the government,â Banbury noted.
In contrast to popular stablecoins like Tether (USDT) and USD Coin (USDC), the upcoming offshore RMB stablecoin will not be a private stablecoin because it is fully decentralized, Banbury said. The executive said that the new stablecoin is called the âoffshore RMB stablecoinâ because its functionality will be limited to global trading:
âThe term âoffshoreâ refers to the RMBâs use for international trading purposes â not domestic trading. The digital yuan is used exclusively for domestic purposes. As such, the offshore RMB is not an âoffshore yuan.â The digital yuan is for domestic purposes overseen by the Peopleâs Bank of China.â
Related: Chinese banks explore e-yuan for selling investment funds and insurance
According to Banbury, the offshore RMB stablecoin is being held through the Shanghai ShuTu Blockchain Research Institute, a branch of the Conflux Tree-Graph Institute for blockchain research and development. The stablecoin has not yet received a dedicated ticker as the development team is still determining when to launch, he added.
One of the worldâs first nations to debut a CBDC, China has continued to crack down on cryptocurrency trading and mining, with local authorities shutting down multiple mining farms and suspending crypto trading transactions this year.
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