China’s largest government-backed research funder has begun accepting applications for the study of stablecoins and their cross-border monitoring systems, a move indicating Beijing’s growing interest – and wariness – towards the emerging digital asset.
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In a circular posted on its website last week, the National Natural Science Foundation of China – an affiliate of the Ministry of Science and Technology that manages hundreds of billions of yuan in annual funding – solicited proposals for the project, which it characterised as addressing an issue critical to the country’s economic development.
“The hidden circulation of private stablecoins can undermine the effectiveness of capital controls, and [presents] a latent challenge to the yuan with the expansion of US dollar-pegged stablecoins,” it said.
The foundation will provide grants of 200,000 yuan to 300,000 yuan (US$28,042 to US$42,063) for the research, and requested winners to “provide policy suggestions on how China should handle challenges brought by global stablecoins and contribute to digital finance governance”.
The application period will end on October 9, with the subsequent research completed within 10 to 12 months of approval.
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Beijing, whose central bank has actively promoted an official digital currency known as the e-CNY, has been paying close attention to the global development of stablecoins, a cryptocurrency with value pegged to another asset. While a stablecoin can be attached to a variety of currencies or commodities, most are tied to the US dollar, either directly or through a derivative asset.
China has taken a firm stance on decentralised cryptocurrencies like bitcoin, enacting a ban on their trading and mining in 2021 due to concerns over financial stability.