Local governments accelerate the exploration of stablecoin applications in foreign trade, market response is positive but risks cannot be ignored.

Recently, Shanghai and Wuxi held meetings successively to explore the application prospects of stablecoins in foreign trade development. This trend has triggered a positive response in the market, with related concept stocks continuing to strengthen. However, experts warn that while innovating, potential risks must also be taken into account.

On July 10, the Party Committee of the Shanghai State-owned Assets Supervision and Administration Commission held a central group study meeting to discuss the development trends and response strategies of cryptocurrency and stablecoin. The meeting emphasized the need to maintain a keen awareness of emerging technologies, strengthen research and exploration of digital currency, and explore the application of blockchain technology in areas such as cross-border trade, supply chain finance, and asset digitization.

At the same time, the Wuxi Municipal Committee proposed to explore the practical path of stablecoin empowering foreign trade development at the key reform task promotion meeting on July 4. These measures may echo the speech made by the Governor of the Central Bank, Pan Gongsheng, at the Lujiazui Forum in June this year, where he mentioned the accelerated application of new technologies in the field of cross-border payments, as well as the development of central bank digital currency and stablecoins.

The market reacted positively to these trends. On July 11, Hong Kong stocks related to stablecoin concepts surged significantly in the morning, and A-share digital currency and blockchain concept stocks also continued to strengthen in the afternoon. Meanwhile, the price of Bitcoin broke through $118,000, setting a new historical high.

However, in the wave of innovation, risk management cannot be overlooked. Recently, Shenzhen and Beijing have issued risk warnings, alerting the public to be cautious of illegal fundraising activities conducted under the guise of stablecoins and other names. These activities often entice the public to invest through false promises of high returns, fund pool operations, and other methods, leading to issues such as lack of qualifications, concept packaging, and risk spillover.

Yang Tao, deputy director of the National Finance and Development Laboratory, suggested that the development of the RMB stablecoin should adopt a "domestic offshore + foreign offshore" linkage model, coordinating the pilot explorations of the domestic Shanghai Free Trade Zone and the foreign Hong Kong market. He emphasized that central regulation should take the lead, constructing a mechanism that combines wholesale and retail, and implementing a "electronic fence" compliance through technological means.

Overall, the application prospects of stablecoins in China are gradually emerging. However, in this innovative field, it is also necessary to be vigilant about potential risks and take effective regulatory measures to ensure the healthy development of the market. Local governments and relevant institutions should strengthen risk awareness while promoting innovation, creating a favorable environment for the healthy development of stablecoins.