Ant Group Shuts Down Rumors of Rare Earth-Backed Stablecoin Development—Here’s Why It Matters

Rare earth metals meet crypto? Not so fast.

Ant Group just slammed the brakes on speculation it's building a commodity-pegged stablecoin—despite whispers of a play to tokenize China's stranglehold on critical minerals. The fintech giant called the claims "baseless," but the market's already buzzing about what could've been.

Why the skepticism?

Stablecoins backed by physical assets—especially geopolitically charged ones—face regulatory minefields. And let's be real: after the crypto carnage of 2024, even Wall Street's degens think twice before trusting "backed by" promises (remember Tether's 40% commercial paper fiasco?).

One thing's clear: in the race to bridge crypto and real-world value, expect more denials before dawn.

There is heightened interest from Chinese companies in stablecoin technology

According to reports, this is still the early days for stablecoins in Chinese jurisdictions. For now, the scope is strictly restricted to international audiences rather than domestic ones.

Last month, Chinese regulators urged brokerages to reduce publishing research and making public comments linked to stablecoins, citing concerns about how it was renewing domestic interest in cryptocurrencies.

With crypto trading officially banned in China due to fears of financial regulation and economic stability, Chinese companies interested in crypto are now looking towards Hong Kong, where a stablecoin regime is forming.

According to Edwin Cheung, CEO of Gate Dubai and a former executive at Gate HK, said: “A lot of e-commerce firms, they’re super energetic about the Hong Kong regime, adding that “they want to leverage on this regime, either to do their own stablecoin or use stablecoin technology or blockchain technology in their own payment network within their business.”

China and Russia see stablecoins as a path to challenge dollar dominance

America opened its eyes to the merits of the stablecoin earlier than most and has set the stage for dollar-backed stablecoins to become the world standard, just as the fiat dollar is. However, China and Russia are not about to sit back and let that happen without a fight.

For several months now, JD.com and Alibaba have been pleading with the People’s Bank of China (PBOC) to approve a stablecoin based on the offshore yuan.

The initiative is being floated just as Russia’s digital ruble is about to become mandatory for banks and large retail chains. Richard Liu, founder of JD.com, has said the yuan backed by a stablecoin is crucial to support the internationalization of the Chinese currency.

While crypto is still banned in mainland China, the Chinese government is keeping an eye on Hong Kong, which it sees as a legal and technological mirror.

This month has seen Hong Kong officially become a regulated ground for stablecoins, and JD and Ant have sighted a geopolitical opportunity.

In May, the city adopted the Stablecoins Ordinance, a legislation regulating stablecoin issuers, and it is being treated as a test. If all goes well, it may change the stance of the government on crypto in China and ultimately set the stage for the rise of a yuan-backed stablecoin that could threaten dollar dominance.

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