China’s First Full Virtual Asset Trading License Awarded to Guotai Junan International

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In a landmark development for the digital asset industry, Guotai Junan International (1788.HK) has officially received full virtual asset trading approval from the Hong Kong Securities and Futures Commission (SFC). This milestone makes it the first Chinese mainland-backed securities firm to offer comprehensive crypto trading services in Hong Kong. The newly granted license allows clients to trade major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), stablecoins like Tether (USDT) and USD Coin (USDC), as well as utility and payment-focused tokens including Dogecoin (DOGE) and Ripple (XRP).

The market response was immediate and dramatic—Guotai Junan International’s stock surged by an astonishing 198.39% the day after the announcement. This explosive reaction underscores growing investor confidence in the long-term potential of digital assets and signals a pivotal shift in how traditional financial institutions are embracing blockchain innovation.

The Digital Transformation of Finance

As digital technology continues to reshape economies and societies, the foundations of traditional finance are being redefined. The rise of digital payment systems has led to a steady decline in physical cash usage, challenging conventional monetary models. In particular, the traditional money multiplier concept—used to explain how central bank money translates into broader money supply—is becoming less effective in today’s rapidly digitizing landscape.

This evolution is pushing central banks and regulators worldwide to reconsider how money is issued, monitored, and regulated. Digital currencies are no longer speculative experiments—they are now central to national financial strategies, especially with the increasing adoption of blockchain technology, decentralized finance (DeFi), and tokenized assets.

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Why Stablecoins Are at the Heart of the Digital Currency Revolution

Among all types of cryptocurrencies, stablecoins stand out due to their unique design and growing role in both retail and institutional finance. Unlike volatile digital assets such as Bitcoin or Ethereum, stablecoins are pegged to real-world assets—typically fiat currencies like the US dollar or euro—ensuring price stability.

There are two key differences between stablecoins and other cryptocurrencies:

  1. Asset Backing: Every unit of a regulated stablecoin must be backed by an equivalent amount of reserve assets (e.g., cash or short-term government securities). This ensures that each coin maintains a 1:1 value with its underlying fiat currency.
  2. Supply Mechanism: The supply of stablecoins is algorithmically adjusted based on demand and price stability. If the market price drops below the peg, the issuer reduces supply to restore balance; if it rises above, new coins are minted.

In essence, stablecoins function as digitized versions of fiat money, combining the efficiency of blockchain with the stability of traditional currency.

Global Regulatory Moves Shape the Future of Stablecoins

Recognizing their transformative potential, major economies are racing to establish regulatory frameworks that support innovation while safeguarding financial stability.

These coordinated efforts reflect a shared understanding: digital money is inevitable, and whoever leads in shaping its rules will hold significant influence over the future of global finance.

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Advantages of Stablecoins in Cross-Border Payments

Stablecoins offer compelling advantages over traditional banking infrastructure:

For businesses and individuals alike, these benefits translate into faster access to capital, lower operational costs, and greater financial inclusion—particularly in underbanked regions.

International Institutions Weigh In

The Bank for International Settlements (BIS), headquartered in Basel, Switzerland, has also weighed in on the stablecoin debate. Ahead of its annual report release on June 25, the BIS emphasized that central banks should accelerate efforts to tokenize national currencies. However, it also issued strong warnings: without robust regulation, privately issued stablecoins could threaten financial stability, disrupt monetary policy transmission, and erode national currency sovereignty.

This dual perspective highlights a critical balancing act—fostering innovation while maintaining control over core monetary functions.

Is a Digital RMB-Backed Stablecoin on the Horizon?

Given these global trends, the launch of a renminbi-denominated stablecoin appears increasingly likely. While China has maintained tight controls over private cryptocurrencies, it has simultaneously advanced its own digital currency electronic payment (DCEP) system—the e-CNY. A regulated RMB-backed stablecoin could serve as a bridge between domestic policy goals and international financial integration, especially within Belt and Road Initiative countries and emerging markets.

However, introducing such a mechanism requires careful planning. Key challenges include:

Despite these hurdles, the momentum behind digital money is unstoppable. As more institutions like Guotai Junan International enter the space under clear regulatory frameworks, the line between traditional finance and decentralized systems continues to blur.

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Frequently Asked Questions (FAQ)

Q: What does 'full virtual asset license' mean for Guotai Junan International?
A: It means the firm can legally offer a full suite of crypto trading services—including spot trading of major coins and stablecoins—to qualified investors in Hong Kong under SFC supervision.

Q: How are stablecoins different from regular cryptocurrencies?
A: Stablecoins are designed to maintain a stable value by being backed 1:1 with reserve assets like USD or EUR. Regular cryptos like Bitcoin have no intrinsic backing and experience high volatility.

Q: Can anyone use stablecoins for everyday payments?
A: Yes, in jurisdictions where they’re legally recognized—such as Japan and parts of Europe—regulated stablecoins can be used for goods, services, and remittances.

Q: Are stablecoins safe?
A: Regulated, reserve-backed stablecoins issued by licensed entities are generally considered safe. However, unregulated or algorithmic stablecoins carry higher risks, as seen in past collapses like UST.

Q: Will China allow private stablecoin issuance?
A: Unlikely in the near term. China prioritizes control over its monetary system and promotes its official digital currency (e-CNY) instead of private alternatives.

Q: How do stablecoins affect central bank policies?
A: Widespread adoption of foreign-backed stablecoins could undermine domestic monetary policy by displacing local currency usage—a phenomenon known as “currency substitution.”

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