Has the first “RMB stablecoin” been issued in compliance with regulations?

The recent hype surrounding the launch of the unsealed RMB stablecoin AxCNH by ChorX has garnered considerable attention, with many believing it was an official coin launch. In reality, this is merely a privately-held stablecoin experiment, and the project, already publicly announced in July of this year, is nothing new. Today, the Sajie team will analyze the feasibility and potential legal risks of issuing this type of experimental stablecoin to help you comprehensively analyze entrepreneurial risks. Is AxCNH truly "compliant"? Let's first analyze the basic parameters of the AxCNH coin:

So, back to the most critical question, is the AxCNH coin really "compliant"?

To say "compliant", we must clarify which country and which jurisdiction's regulations it complies with. The service agreement published on Anchorx's official website provides no detailed information about the issuing entity (country of origin, capitalization, shareholder structure, management team, etc.), only its name—Anchorx Group. However, given that its administrative license was issued by Kazakhstan, it's highly likely that the entity is based in Kazakhstan, or that at least one of its main operating entities exists in the country. Therefore, the so-called "compliance" of AxCNH coin primarily relates to Kazakhstan's regulations. As we all know, financial regulation generally has "strong territoriality", that is, a country's financial license does not have universal effect in the absence of international treaties, multilateral or bilateral treaties, and can only be effective within its national scope. Therefore, the compliance scope of AxCNH currency is limited to Kazakhstan. If it wants to conduct business in Hong Kong or the European Union, it still needs to obtain local licenses or administrative permits. Otherwise, it will still be regarded as an illegal act and may even incur criminal risks. It's important to note that, according to our team's investigation, the issuer of AxCNH also confirmed in its public risk disclosure that the stablecoin is unbacked by a government, is not a legal tender, and is insolvent. Are there any legal risks associated with widely issuing stablecoins after obtaining administrative approval from a particular country? To begin with, there are legal risks. As mentioned earlier, financial security is a vital livelihood issue for every sovereign nation. While stablecoins undoubtedly serve as an efficient and low-cost payment tool, helping users reduce transaction costs, they also have the potential to challenge a nation's coinage rights and can be easily exploited as a tool for crime. Consequently, regulatory agencies around the world are less friendly toward stablecoins than they are toward high-market-cap coins like BTC and ETH. Only a handful of countries or jurisdictions allow the issuance and operation of stablecoin businesses within their borders in a compliant manner, but this is subject to a prerequisite: obtaining administrative approval from the jurisdiction in question. Taking Hong Kong as an example, according to Section 5 of the Hong Kong Stablecoin Ordinance, regulated stablecoin activities, as summarized by the Sister Sa team, mainly refer to: (1) Issuing specified stablecoins or issuing Hong Kong dollar (whether fully or partially referenced) stablecoins in Hong Kong; (2) Issuing stablecoins outside Hong Kong, but actively promoting them to the Hong Kong public or conducting promotional activities in Hong Kong, will constitute regulated stablecoin activities. Therefore, if a friend obtains a license to issue stablecoins or engage in related businesses in a foreign country, it cannot be assumed that they can freely carry out issuance activities in other regions. This can be clearly seen from Hong Kong's regulatory logic. As clearly stated in Section 5 of the Hong Kong Stablecoin Ordinance, even if a stablecoin is issued overseas, as long as it is actively promoted to the Hong Kong public, it will constitute a regulated activity and must comply with Hong Kong's regulatory requirements. Violations will be severely punished. According to relevant laws and regulations, anyone who conducts unauthorized regulated stablecoin activities or holds themselves out as conducting such activities is committing a criminal offense. Upon summary conviction, the offender may be fined up to $500,000 and imprisoned for two years. If the offense is a continuing offense, an additional fine of $10,000 for each day the offense continues. If convicted upon indictment, the offender may be fined up to $5,000,000 and imprisoned for seven years, with an additional fine of $100,000 for each day the offense continues. Similarly, if a stablecoin licensed overseas wishes to be issued or promoted in other regions such as Singapore and the European Union, it must also comply with local regulatory rules. It can be seen that although AxCNH holds a license from Kazakhstan's AFSA, which complies with certain local regulatory requirements, this license is only valid within Kazakhstan and does not cover the regulations of other countries or regions. If it intends to issue or promote virtual assets to users in other regions, if it crosses local regulatory red lines for virtual assets, such as conducting related business within China, it will face legal liability for violating China's regulations prohibiting virtual currency-related business activities. This also confirms that a single-country license cannot support the widespread and "borderless" issuance of stablecoins, and that cross-regional compliance differences are always an unavoidable legal risk. The Impact of AxCNH Coin: The impact of AxCNH's compliance implementation in Kazakhstan on trade and the economy along the Belt and Road Initiative is still under discussion. Sister Sa believes that while it may not generate significant economic value in the short term, it still holds considerable potential. For veterans of the cryptocurrency world, the regulatory compliance of AxCNH Coin may attract temporary market attention. As a stablecoin pegged to the offshore RMB and holding an overseas license, it may attract interest from some cryptocurrency enthusiasts seeking "compliance." However, caution is warranted. As mentioned above, according to the document, AxCNH remains a private stablecoin, not an officially issued digital currency. It explicitly states that it "does not possess legal tender attributes and is not government-backed." Furthermore, it presents issues such as opaque reserve fund supervision and cross-regional compliance risks. This means that participating in this venture carries risks far exceeding those of traditional compliant financial products. Don't underestimate the inherent nature of virtual assets simply because they appear to be "compliant in a single country." Sister Sa reminds everyone to rationally assess the risks before making a decision.

Final Note

Based on the above, while AxCNH has achieved partial compliance in Kazakhstan, its scope is limited, cross-regional promotion carries legal risks, and insufficient information disclosure by the issuer poses significant limitations for both Belt and Road trade promotion and cryptocurrency participants. Its current development is subject to multiple constraints.

However, while AxCNH's current impact has fallen short of expectations, its attempt to comply with regulations as an offshore RMB stablecoin is a step forward in industry exploration. Its subsequent trial in the Belt and Road Initiative will also drive market attention and debate on RMB stablecoins and cross-regional regulation, injecting new variables into the stablecoin market and sparking heated discussion within the cryptoasset community.