Does JD’s participation in the Hong Kong sandbox program mean that mainland China’s blockade on cryptocurrencies is about to be fully liberalized?

On July 18, the Hong Kong Monetary Authority (HKMA) revealed the first participants in its "Sandbox" for stablecoin issuers.

This initiative includes JD CoinChain Technology, Yuanbi Innovation Technology, and a consortium comprising Standard Chartered Bank, Animoca Brands, and Hong Kong Telecom (HKT).

JD CoinChain Technology involvement means first public involvement of a mainland Chinese company in Hong Kong cryptocurrency event.

JD CoinChain background

JD CoinChain Technology, a subsidiary of JD Technology, focuses on digital currency payment systems and blockchain infrastructure.

Led by CEO Liu Peng, who is also JD Technology's vice president, the company holds multiple licenses from the Hong Kong Securities and Futures Commission (SFC).

As one of the largest technology companies in China, JD Technology’s influence across China is self-evident.

The "Sandbox" plan

The "Sandbox" was launched by the HKMA in March 2024 to promote the sustainable and responsible development of the stablecoin ecosystem in Hong Kong.

It allows institutions to test their business models within a controlled environment and facilitates two-way communication on regulatory requirements.

Hong Kong has been advancing its stablecoin regulatory framework since January 2022. The HKMA's efforts culminated in a consultation summary and legislative proposals issued in July 2024, aimed at establishing a risk-based, proportionate regulatory system for stablecoins.

The HKMA has warned that initial "Sandbox" participants will not use public funds or raise funds from the public. Citizens should be vigilant against potential frauds related to the "Sandbox."

Several scholars’ views on the "Sandbox" Project

Some scholars, including Wang Yang from the Hong Kong University of Science and Technology, have proposed issuing a Hong Kong dollar stablecoin backed by foreign exchange reserves.

This government-backed stablecoin could enhance Hong Kong's financial system and boost its digital economy.

Previously, Wang Yang, Vice President of Hong Kong University of Science and Technology, publicly stated at the first Hashkey New Horizons event on June 26 that mainland China should re-examine the meaning of cryptocurrency.

Rather than banning cryptocurrency mining across the board, it is better to allow state-owned enterprises to mine or take shares to ensure risk control.

JD’s participation in the sandbox program may represent the whole of China

The “sandbox” plan not only marks an important step for Hong Kong’s digital financial landscape, but also an important step for China as a whole in the field of cryptocurrency.

With Trump having a high probability of being elected, China’s selection of JD as the first to participate in the sandbox program may be to test the feasibility of cryptocurrency in China.